The Public Utilities Commission of Sri Lanka (PUCSL) on Tuesday (9) approved what it said was Sri Lanka’s first electricity tariff hike in nine years. The increase, which is equivalent to an average 75% price hike in the electricity tariff for all consumers, was obviously not welcomed by the public, which is already struggling amidst the economic crisis.
The tariff hike was based on two proposals forwarded by the Ceylon Electricity Board (CEB). In a context where the CEB has had to use fuel to generate power, and the CEB being one of the highest loss-making institutions, the necessity of a price increase was discussed for some time. However, in a new move, the PUCSL has decided to impose certain conditions on the CEB to implement certain suggestions that emerged during public consultations held by the PUCSL with regard to the said tariff hikes. The conditions include, among others, conducting an independent audit with specific dates with regard to purchasing electricity.
Increasing the prices of or taxes on a product or a service is a standard step when a need arises to balance income against increased expenses. However, it is not that simple a measure when it comes to increasing the price of or tax on a product or a service offered by a loss-making institution, because that loss is most likely to be one of the reasons that constitutes a necessity to increase the prices or taxes. When it comes to public institutions such as the CEB, the situation is much more serious due to a number of reasons, including electricity being an essential good and the CEB being one of the main loss-making public institutions.
In this context, it is extremely important that the Government and the authorities come to terms with the fact that hiking the price of or tax on electricity to cover losses, not to cover direct costs which have increased, should merely be an initial or an interim step in dealing with the sorry state of the CEB. Put simply, as some economists have pointed out, instead of putting the burden of the losses on the public, steps should ideally be taken to reduce or avoid losses, which would be the ultimate goal of a massive reform process. This process should include the underlying factors that have resulted in losses, as well as the inability to cover losses without increasing the price of or the tax on electricity. Most importantly, these reforms should go beyond addressing the monetary aspects of an institution, and should also focus on non-monetary aspects that have a connection to the institution’s performance, which plays a role in how much revenue it generates and how much losses it suffers.
In addition to inherent issues in public institutions such as the CEB or the Ceylon Petroleum Corporation (CPC) that cause such losses, based also on certain matters discussed at the Committee on Public Enterprises, it can be recommended that this reform process pay attention to special projects that have led to losses due to improper planning or implementation; bloated or unjustifiable incentives; allowances and bonuses enjoyed by officials; perks such as overtime pay that are being heavily misused; archaic policies and practices that have hindered innovative or new initiatives, especially those that can be employed to reduce the prices of goods or services; institutional issues such as bureaucracy, nepotism, and bribery; and lastly, institutional rules and policies pertaining to various links that high-ranking officials maintain with private actors or positions held in private institutions, especially those that constitute a conflict of interest.
Such a comprehensive reform process will not only prove beneficial by reducing losses or increasing income. It is beneficial to the public as well, because effective financial management in public institutions can ultimately help reduce the prices of and/or taxes on the goods and services, while also reducing public funds that need to be invested to maintain these institutions.
The Government has paid attention to the halting of new recruitments to the public sector, encouraging public employees to seek foreign employment opportunities, and privatising or restructuring loss-making public institutions. In this context, introducing tailor-made reform plans for loss-making public institutions is crucial. If implemented properly, such would perhaps reduce the need to opt for less preferred measures, such as privatisation.
Sri Lanka is struggling to save what is left of its economy, and the unbearably massive public sector, especially such loss-making public institutions, has played a considerable role in this economic collapse. Proper reform processes would help make these institutions become partners in the country’s economic revival, instead of allowing them to remain hurdles in its progress.Reforming the burdensome public sector
11 Aug 2022
Reforming the burdensome public sector
11 Aug 2022
The Public Utilities Commission of Sri Lanka (PUCSL) on Tuesday (9) approved what it said was Sri Lanka’s first electricity tariff hike in nine years. The increase, which is equivalent to an average 75% price hike in the electricity tariff for all consumers, was obviously not welcomed by the public, which is already struggling amidst the economic crisis.
The tariff hike was based on two proposals forwarded by the Ceylon Electricity Board (CEB). In a context where the CEB has had to use fuel to generate power, and the CEB being one of the highest loss-making institutions, the necessity of a price increase was discussed for some time. However, in a new move, the PUCSL has decided to impose certain conditions on the CEB to implement certain suggestions that emerged during public consultations held by the PUCSL with regard to the said tariff hikes. The conditions include, among others, conducting an independent audit with specific dates with regard to purchasing electricity.
Increasing the prices of or taxes on a product or a service is a standard step when a need arises to balance income against increased expenses. However, it is not that simple a measure when it comes to increasing the price of or tax on a product or a service offered by a loss-making institution, because that loss is most likely to be one of the reasons that constitutes a necessity to increase the prices or taxes. When it comes to public institutions such as the CEB, the situation is much more serious due to a number of reasons, including electricity being an essential good and the CEB being one of the main loss-making public institutions.
In this context, it is extremely important that the Government and the authorities come to terms with the fact that hiking the price of or tax on electricity to cover losses, not to cover direct costs which have increased, should merely be an initial or an interim step in dealing with the sorry state of the CEB. Put simply, as some economists have pointed out, instead of putting the burden of the losses on the public, steps should ideally be taken to reduce or avoid losses, which would be the ultimate goal of a massive reform process. This process should include the underlying factors that have resulted in losses, as well as the inability to cover losses without increasing the price of or the tax on electricity. Most importantly, these reforms should go beyond addressing the monetary aspects of an institution, and should also focus on non-monetary aspects that have a connection to the institution’s performance, which plays a role in how much revenue it generates and how much losses it suffers.
In addition to inherent issues in public institutions such as the CEB or the Ceylon Petroleum Corporation (CPC) that cause such losses, based also on certain matters discussed at the Committee on Public Enterprises, it can be recommended that this reform process pay attention to special projects that have led to losses due to improper planning or implementation; bloated or unjustifiable incentives; allowances and bonuses enjoyed by officials; perks such as overtime pay that are being heavily misused; archaic policies and practices that have hindered innovative or new initiatives, especially those that can be employed to reduce the prices of goods or services; institutional issues such as bureaucracy, nepotism, and bribery; and lastly, institutional rules and policies pertaining to various links that high-ranking officials maintain with private actors or positions held in private institutions, especially those that constitute a conflict of interest.
Such a comprehensive reform process will not only prove beneficial by reducing losses or increasing income. It is beneficial to the public as well, because effective financial management in public institutions can ultimately help reduce the prices of and/or taxes on the goods and services, while also reducing public funds that need to be invested to maintain these institutions.
The Government has paid attention to the halting of new recruitments to the public sector, encouraging public employees to seek foreign employment opportunities, and privatising or restructuring loss-making public institutions. In this context, introducing tailor-made reform plans for loss-making public institutions is crucial. If implemented properly, such would perhaps reduce the need to opt for less preferred measures, such as privatisation.
Sri Lanka is struggling to save what is left of its economy, and the unbearably massive public sector, especially such loss-making public institutions, has played a considerable role in this economic collapse. Proper reform processes would help make these institutions become partners in the country’s economic revival, instead of allowing them to remain hurdles in its progress.Kapruka
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Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!