Privatization, the only option | Daily News

Privatization, the only option

All local newspapers and TV stations yesterday gave prominence to the story of Cabinet approval being granted to three global fuel suppliers to enter the fuel retail market in Sri Lanka. They are China’s Sinopec, Australia’s United Petroleum (UP) and RM Parks of the United States of America.

They will operate in collaboration with Shell PLC. Paradoxically, it was Shell that was given marching orders by the Sirimavo Bandaranaike Government in the early sixties in the frenzy of nationalization, though her daughter Chandrika Kumaratunga invited them back for LP Gas operations. It was the view of most that had the company remained here intact we would not have had to face the acute fuel crisis some months ago.

The three companies will be allocated 150 dealer-operated fuel stations each which are currently under the Ceylon Petroleum Corporation (CPC). They will receive a license to operate for 20 years to import, store, distribute and sell petroleum products in Sri Lanka. The move comes in the wake of the US$ 2.9 billion IMF bailout package which has as one of its conditions the unburdening of the State of all loss-making State-Owned Enterprises (SOEs).

It also comes in the wake of the firm stand taken by President Ranil Wickremesinghe that the Government should keep out of doing business and leave this task to the private sector.

Speaking at the 71st D. S. Senanayake Commemoration, the President said had the country followed the market-driven economy pursued by the Father of the Nation, we would have surpassed Singapore today. Singapore followed D.S. Senanayake’s economic policies while we regressed into nationalism in 1956 where the State undertook the task of doing business and turned the clock back. He said from now on he would chart a new economic course by following the D.S. policy, leaving the business aspect to the private sector.

It is certainly in pursuance of this new economic order that the present development should be viewed. Besides, when he took over as Prime Minister in his maiden speech in Parliament President Wickremesinghe spoke of the need for divesting SOEs which continue to incur heavy losses and singled out the national carrier for special mention. Perhaps, the new entrants to the petroleum sector are a sign that more is to follow in keeping with the President’s stand.

The Trade Unions, true to form, are up in arms against the move and have launched a ‘Satyagraha’ to scuttle the handover. This is despite the CPC being the key player in the market. The Government intends to liberalize the fuel trade in the country by opening it up to many players. Thus, while affording healthy competition, this could also lead to price benefits to the consumers.

In Western countries filling stations operating close to each other, sell their fuel at different prices giving the consumers a choice. The Lanka Indian Oil Company (LIOC) which accounts for one third of the country’s fuel supply will also be a key operator. Therefore, this will lead to keen competition which is what the market economy is all about.

Politically-driven trade unions should therefore look at the bigger picture and above all, think of the country’s future. Things certainly cannot be allowed to meander on in the manner that we have been accustomed to all these years. Its repercussions are already being felt, with the economy plunged into a black hole.

The President is attempting to pull the country out of the mire and steer things on an even course until the new dawn is in sight. The economic recovery path on which the President is treading is the only available option.

There is no other. Neither has any Opposition political party come out with one. Trade Union opposition to the only available option, therefore, is unacceptable and should be resisted. This may be our last chance to salvage the economy from total collapse and anything that stands in the way should be eliminated. The Government should be firm on this score.

State sector bodies that are a burden on the economy, and the taxpayers in particular, should be dismantled. The Government cannot continue subsidizing loss-making SOEs, the way things stand on the economic front. There are over 5,000 employees at the CPC, a good majority of them time servers who owe their appointments to politicians. It is quite plain why they are agitating.

Both major political parties must bear responsibility for turning once profitable State ventures to financial ruin through overstaffing. Things reached a peak during the Yahapalanaya where both main parties were at the levers of power and did as they pleased. Both parties stuffed the CPC with their supporters to their hearts’ content, driving the organisation to the ground. This abomination must end now and the only available option is privatization.

Not just the CPC, all SOEs should be made to run efficiently and show profits failing which they should be divested from State ownership and handed over to the private sector. After all, isn’t the private sector known as the engine of growth? This is exactly what the economy needs now - growth in every sector.



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