Fire sale on
Wednesday 31st August, 2022
Trade unions in the power and energy sectors are up in arms against a government move to restructure the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC). They would have the public believe that the blame for the staggering losses the two institutions have been incurring should be laid at the feet of politicians. Successive governments have mismanaged the state-owned enterprises (SOEs), but the blame for ruining them should be apportioned to their workers.
The CEB trade unions abuse the monopolistic power of their institution to feather their nests while doing precious little to improve their service to the public. So do their CPC counterparts. The task of developing the power sector cannot be accomplished owing to resistance from various lobbies that control the CEB, which is averse to renewable energy and is doing everything in its power to discourage solar power producers.
President Ranil Wickremesinghe, in his interim budget speech, yesterday, revealed a government plan to set up an outfit called the “State-Owned Enterprise Restructuring Unit” to facilitate the restructuring of SOEs. He made special mention of SriLankan, the CEB and the CPC as institutions in need of restructuring, but the government is said to be planning to divest profit-making SOEs such as Sri Lanka Insurance, etc., as well.
Public-Private Partnerships (PPPs) are the order of the day, and there is no way we could resist global trends and maintain white elephants, but how advisable is it to throw the baby out with the bathwater? There are efficient, profitable public ventures, which help augment state revenue significantly, and it defies comprehension why they should be divested. Sri Lanka Insurance is one of them.
There is nothing intrinsically wrong with restructuring, which is anathema to some politicians, who are advancing populist agendas, but it is not advisable to restructure SOEs indiscriminately. If the profit-making SOEs are divested, as planned, then there is bound to be a huge drop in state revenue, and how does the government propose to meet such a revenue shortfall? Will it go on increasing taxes? VAT has already been increased from 12% to 15%.
As for the loss-incurring SOEs, causative factors must be identified and remedial action taken before they are divested. Most SOEs are overstaffed because successive governments have used them to provide jobs to their supporters. The CPC and the state-owned bus and train services may serve as examples. The heads of most SOEs are political stooges who are not qualified to be employed even as labourers in the state sector. In the final analysis, the real problem is the political dregs people have elected to govern the country all these years.
If increasing state revenue, regardless of the methods adopted to achieve that end and suffering they cause to the public, is the goal of a government, then the task of running a country might as well be handed over to a bunch of greedy traders who are adept at exploiting the public and maximising profits.
Meanwhile, the government seems to be using every trick in the book to justify and promote its divestiture programme. The Central Bank is reported to have said the current forex inflow is sufficient for fuel imports. Minister of Power and Energy Kanchana Wijesekera appears on television and declares that payments have been made for fuel shipments. The CPC says enough petroleum stocks are available. But fuel queues have formed again. (One wonders whether ‘Q’ in QR code on the national fuel pass stands for ‘Queue’!) How could this phenomenon be explained? Is it that an artificial fuel shortage has been created to turn public opinion against the CPC and justify the government’s plan to restructure it? The government brags that 10 countries have already expressed willingness to engage in fuel distribution here. Venal politicians and their bureaucratic lackeys prefer the spot purchasing of fuel for obvious reasons. They make the most of shortages of essentials and compass their sinister ends. They have got it down to a fine art.
