|
 his
letter refers to your inaugural edition featuring the nation’s largest
State Owned Enterprises or SOEs as you call them (LMD, April 2006
Cover Supplement – THE LMD STATE 20). There are a couple of aspects that I
feel arise from your analysis. It is apparent that of the 20 enterprises,
some are monopolies whilst others are utilities. In both cases, your
analysis demands some thought-provoking debate, hopefully for the
betterment of these SOEs.
Firstly, monopolies – which by
definition have no competition – have no real incentive to perform.
Whatever happens, they will go on – for they do serve a purpose, however
inefficiently and ineffectively.
The three loss-making enterprises in
2004/05, according to your analysis, are the CEB, the Water Board and the
Ports Authority – all of which are monopolies, and all made losses in the
previous year as well. Compare the performance of these enterprises with
those of former monopolies like Sri Lanka Telecom (SLT) today, and the
benefits of increased competition will be evident to all.
In fact, one could even compare them to
the banking sector, and deduce that the healthy profits of the Bank Of
Ceylon, People’s Bank and the National Savings Bank are a result of the
raising of the bar by private-sector banks, which are in direct
competition with the state banks.
The issues confronting the utilities are
rather more complex. The two loss-making utilities in the 20 largest SOEs,
the CEB and the Water Board, could eliminate their losses by simply
raising their prices to the point at which they would, at the very least,
break even. But this will not be in the interest of the people of Sri
Lanka – the very people that the utility was intended to serve: its
mission statement, so to speak. In the case of the CEB, its primary
objective is to provide an uninterrupted supply of electricity to as many
people living and working in this country as possible (the sad fact that
it only reaches some 60 per cent of the people at present is also an issue
of economics – and of politics, it goes without saying).
| |
STATE OF
THE STATE
While the inaugural edition
of THE LMD STATE 20 suggests that competition is a yardstick for an
organisation’s improvement, utilities may have to be measured
differently. |
While the physical supply – be it
electricity or water – has to be available at the households, the usage of
it has also to be affordable. For what is the use of a utility being
available to a household if it is out of the financial reach of many Sri
Lankans?
To go back to the SLT example, there was
a time when most people who had telephones did not have the facility to
make international calls due to the exorbitant cost of using it.
While one conclusion that can be reached
from the inaugural edition of THE LMD STATE 20 is that competition appears
the key to an organisation being the best it can be, perhaps another
conclusion that could be reached is that utilities should be looked at in
a slightly different light.
If, for example, we can accept that the
public – particularly at the lower end of the economic scale – need to
have subsidised utilities to survive, then perhaps we should budget a
predetermined deficit for these organisations each year… just as there is
a national budget, only that this budget deficit should not be exceeded.
And if it is, the penalties should be severe – for both the employees (by
withholding bonuses and/or pay rises) and the customers (by restricting
supply).
This, perhaps, is the only way to instil
the necessary discipline in the people of Sri Lanka – whether they be
workers at a state-owned utility or whether they be customers of that
utility!
Roshan
Subasinghe,
Nawala. |
