Talking in context

Saturday, 12 March 2011 00:01 - - {{hitsCtrl.values.hits}}

WHAT comes first, the chicken or the egg? As elections come ever closer, the challenges of a welfare-focused economy are heaped on the people with mixed results.

During the last two days several actions taken by the President and the Government have given reason for thought-provoking discussion. On Thursday it was announced that the Ceylon Electricity Board (CEB) has recorded a profit of Rs. 5 billion against a loss of around Rs. 11 billion the previous year.

However, as an institution that has been making losses for the past decade, the burden on the State is not significantly lessened. At the same time the Ceylon Petroleum Corporation (CPC) has pointed out that due to giving fuel to the CEB at a subsidised rate, its losses have increased. With global fuel prices escalating beyond US$ 100 per barrel, this scenario is not likely to change in the near future.

Restructuring the CEB and CPC to become self-sustaining institutions is an agreement that the Government signed as part of the Stand-by Facility with the International Monetary Fund (IMF). The target is to achieve this by the end of this year and Power and Energy Minister Champika Ranawaka has already pointed out that this would be impossible and the realistic target is around 2013. Since the CEB leeches off the CPC, what the profits of one give is taken from the consumer by the other. Therefore the real benefit passed onto the masses is doubtable.

Whether the two organisations can stick to the projected plans and break even in the stipulated time remains to be seen. While the fact that the CEB has finally taken steps to redeem its white elephant image is laudable, its effect is limited and sustaining progression of profits the greatest challenge before it. Managing cash flows while electrifying the development drive of Sri Lanka will be a dual battle.

A shocking fact that was revealed during the press conferences to announce the CEB’s profit was that no one pays for street lighting. Perhaps one method of reducing the losses is to get the local authorities to do their job and pay the street light bill from tax monies collected from the people. Such a measure would not only provide service to the people but ensure that monies are paid regularly for other maintenance purposes as well.

The announcement that the Government will give a fertiliser subsidy to all farmers was greeted with scepticism as well. The fact that no forms have to be filled or notifications given leaves room for corruption, with no one being held accountable to see whether the farmers who need the fertiliser most do indeed receive it. Millions spent on this will also be unaccounted for and the effectiveness of this programme will be ignored.

Subsidies and development funds granted without proper monitoring and follow-up mechanisms do little to impact the overall economy or even the people who desperately need assistance. Fertiliser is needed mostly for flood-affected areas, along with other ways for them to re-establish their livelihoods. Random announcements and short-lived policies only waste funds and damage the Government’s credibility.

Therefore, it would make more sense to focus on a concentrated development plan that targets the vulnerable rather than bragging about short-lived laurels.