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Friday, 15 August 2014 00:07 - - {{hitsCtrl.values.hits}}
Q: How would you describe the three institutions that continue to incur heavy losses?
A: Ceylon Petroleum Corporation, Mihin Lanka and Ceylon Fisheries are the biggest losers. If we take Mihin Lanka, in 2011 their loss was nearly Rs. 1 billion, in 2012 there was a Rs. 2 billion loss and in 2013 the amount was nearly Rs. 3 billion. The excuse they have is that the company was not given enough capital and therefore they have to run the airline on borrowed money.
My argument is different. Criticising only the management is not correct. The Cabinet of Ministers too should be held responsible. Who made the decision to start a new airline? When it was started, didn’t they ask for a feasibility report? What does that feasibility report say about the performance of the company today? Has anybody really compared this? Nobody should be excused. Responsibility for this goes all the way to the Cabinet and the people who made the decision to start this airline.
They say Mihin is a budget airline. But even budget airlines should make profits. When the loss is one billion or two billion rupees, they cannot hide behind the fact that they are doing a public service. They are subsiding through public funds. Now there are talks about merging Mihin Lanka and SriLankan Airlines. But I say a bankrupt company like this should be closed down. What needs to be done is develop a strategy to make our national airline succeed. Why do we need to create a disaster and hoist that disaster on an airline which is already struggling?
Mihin Lanka has to pay Ceylon Petroleum Corporation (CPC) 4.4 billion rupees. CPC has dues from many other companies which are all in millions, but Mihin Lanka owes 4.4 billion. This is exactly why I say Mihin Lanka needs to be shut down.
Profitability of CPC has actually improved. CPC and CEB improved during 2013 and 2014. The COPE is looking at these institutions at a surface level. But we need to look at this more deeply. The cost of importing a litre of petrol will only cost between Rs. 85 to Rs. 89. But a petrol litre is priced at Rs. 170. The actual refined oil is only Rs. 85. Tax is about Rs. 45 to Rs. 48, the rest is for refining and distribution cost. Where is that other money going? It is going into inefficiency and corruption. Nobody can say these companies are doing well because it has nothing to do with the company. These profits going up and down are not because of improved efficiency mostly due to revised tariffs.
Q: Why are you critical about COPE and its efforts?
A: Let me explain with an example. There is a patient who suffers from diabetes. He has a wound in his toe. COPE is trying to heal the wound and it also appears to be improving. But the patient is dying of kidney failure due to diabetes.
We are very institutional focused and therefore we miss the real and bigger issues that are there. On the other hand, COPE cannot say there is corruption in the public sector and then claim we have to wait for Executive action. We cannot hide behind that excuse. In a way the Executive is corrupt and we are asking the Executive to investigate its own corruption. Therefore COPE needs to have some mechanism.
Q: Are you saying COPE’s focus on the public sector is limited and therefore the report lacks profundity?
A: Although the Government claims the public sector is improving, I am saying it is dying. They are looking at these institutions in a vacuum. Unless the public sector keeps up with modern technology and modern management, it will not flourish. Even for the private sector to improve, it is essential to have a highly-knowledgeable and motivated public sector.
The UNP has been labelled in the past of bashing the public sector. But I am actually trying to make a case for investing in the public sector. This Government has gone for high numbers and poor quality but what we actually need is high quality in the public sector. State institutions cannot attract high quality management. We have recommended that both boards of directors and senior managers have to have minimum qualifications and experiences. But the Government has not implemented that as yet.
The truth is, we haven’t called a spade a spade in the report. We know that some people are totally incompetent for the job that they are holding. SriLankan Airlines and Ceylon Petroleum are examples. We have to look whether those boards of directors and senior managers have the minimum requirement to run those institutions. This problem exists due to politicisation. This situation largely exists in the management grade due to poor salaries and therefore it is difficult to attract good quality. Therefore in the public sector there is a dearth of scientists, engineers, accountants, lawyers and managers because they cannot be properly remunerated.
We have not focused on the importance of investing in training. If we need to upscale the public sector, we need to spend at least 10% of the salary bill on training. Scientists, managers and accountants need to be trained. They have to know the latest changes, what the global standards are and so on. Unfortunately COPE has not even evaluated that.
Another problem with our public sector is that they are not customer centric. People have been fed with the idea that what matters most is ownership and not benefit. Opposition Parliamentarians were not allowed to enter the Sapugaskanda refinery. They said it was ‘ours’ and they have to protect it. Who is ‘ours’? Is it the workers who live there? But to the public all that matters is good quality fuel at a competitive price. These are national assets. These people are fighting to keep those institutions that way for the benefit of a small group of people.
The lack of competitive bidding and poor governance are some of the other important facts that have not given much prominence in the COPE report.
