BY JACK ASSA
In recent years, public service institutions in Papua New
Guinea have failed a lot in delivering goods and services to the people. Corruption, lack of capacity, and lack of
modern facilities and infrustructires are some of the many reasons in public
institutions performing poorly. Many of the State Owned Enterprises (SOE) like
PNG Power Limited (PPL) and Air Niuguni to name a few, are not performing to
the expectation of the government and the public. The state owned entities may
have performed but studies conducted by Asian Development Bank (ADB) points out
that their performance came at a higher price. Various governments have been
looking for ways on how to deliver services effectively to the people and
public private partnership (PPP) was envisioned as a government strategy to
improve service delivery in 2003.
Public-private partnerships in the delivery of public
services have become a phenomenon which is spreading the globe and generating
great interest. But why is a concept, barely mentioned a decade ago, now
attracting such interest? Overall, the answer is that PPPs avoid the often
negative effects of either exclusive public ownership and delivery of services,
on the one hand, or outright privatization, on the other. In contrast, PPPs
combine the best of both worlds: the private sector with its resources,
management skills and technology; and the public sector with its regulatory
actions and protection of the public interest. This balanced approach is
especially welcome in the delivery of public services which touch on every
human being’s basic needs.
The level of a country’s
economic achievement is directly correlated to the level of adequacy in the
country’s public services. While developed countries have established good
infrastructure and are ready at any time to further modernize them in response
to the rapidly growing public service demands, it is not the case with Papua New
Guinea and other developing countries in the Pacific and around the world.
PNG is lacking far behind
developed countries and generally is still faced with great difficulty to
barely suffice its basic infrastructure. As a result, public services in the country
and its economic performance are poor. Today with urban and most rural public
service deteriorating, corruption hacking the fabric of the society and public
service institutions underperforming, state owned entities’ inefficient and
ineffective, globalization putting more pressure on the government, thus, PNG
is faced with a more severe challenge where even the regional and global
demands must also be taken into account.
Former Prime
Minister and State-Owned Enterprise Minister under O’Neil-Namah regime, Sir
Mekere Morauta once described the underperforming state entities of the
country as crumbling and pretending to stand, but will soon fall. Public
service institutions including the SOEs have big mouths where government funds
go in and disappear. Instead of the SOEs paying dividends to the government,
they are sucking a lot from the government to stay alive, hence, not effective
and efficient in delivery service to the people.
It must also be noted that,
governments typically subsidize SOEs to deliver community service obligations
such as water, electricity, telecommunications and transport services, because
the fees collected from users are insufficient to cover the cost of delivery.
When these services are delivered by SOEs without adequate compensation from
the government, the financial performance of the SOEs suffers. This approach
forces SOEs to focus on their core mandate of operating as successful
businesses, meet their costs of capital, and undertake community service
obligations on a commercial basis. In this process, community services
delivered are not enough. In such situation, the public’s demand for services
cannot be adequately met by the SOEs.
An example of one government entity that failed to provide
the much needed service is the PNG Power Ltd (PPL). Last year, the entity has
blamed the government for failing to finance rehabilitation of the company’s assets, including replacing
old and under-performing machines, equipment and infrastructure. PPL argued
that the government was responsible for the upkeep and maintenance of the
company’s assets, machines and equipment. The logic that PPL and other entities
need to know is that the government cannot continue to fund SOEs, though, their
parent is the government.
In PPL’s case, constant break down in power plants, and
dropping in power generations resulting in black-outs has left the company
under pressure to solve the problem, hence, credit goes to the hardworking
staff who are tirelessly working to meet the demand of the electricity
consumers. Many people in the urban centers depend solely on electricity for
cooking, lightings, washing, refrigeration, etc…, hence, disruption in the
power affects the people. Many business houses have raised their frustration concerning
black outs leading to loss of business. Constant blackout is not just a problem
but is a policy problem that can be resolved through PPP.
Few weeks ago, the current Minister for State Owned Enterprise,
Hon. Ben Micah revealed through the mainstream media that Independent Public
Business Corporation (IPBC), the entity that is housing all the SOEs in the
country, was working around the clock to bring in a private electricity company
to work with PPL to provide electricity. This is welcoming and relieving news for
the country.
Many countries are doing better in the likes of the Tiger Economies
in South East Asia led by Singapore since 1960. Their SOEs and partnership with
the private sector is a driving force behind their rise and delivering goods
and services to the public. In PNG, a benchmark studies by the Asian
Development Bank (ADB), affirmed that SOEs in the country are not performing.
ADB then made some recommendation and one of this was for PNG government to promote
increased private sector participation in SOEs through partial privatization
and public private partnership.
There are lots of good reasons why many economic powers in
the region and around the world favour PPPs and plenty of evidence that they
work well. But they do present a severe organizational and institutional
challenge for the public sector. They are complex in nature, requiring
different types of skills and new enabling institutions and they lead to
changes in the status of public sector jobs. To work well, they require
well-functioning institutions, transparent, efficient procedures and
accountable and competent public and private sectors, i.e. ‘good governance’.
Private Sectors have the resources, management skills and
technology. Therefore, the government must engage private sector through reformed
strategies, like PPP to deliver public services effectively and efficiently to
the very people who own the SOE and expect the best and quality from it.
On the other hand, successful PPP in public service depend largely on public
acceptance and support to the PPP concept itself. The public consumers need to
understand why the private sector is needed to embark into partnership with the
state in providing the services that they need, and what will be the merits and
consequences in doing that. Also the public need to exactly understand the
phenomena of globalization that nobody can deny, also what are its merits and
challenges. PPP needs to be socialized to the public.
Let me end this part (Part 1) of this issue by stating that
through PPP, public services will be efficiently and effectively delivered to
the people. The responsibility to deliver service will be shared between the
government and the private sector. Private sectors have the resources, skills
and technology and will embark on efficient and effectiveness in partnership
with the government. To deliver much needed goods and services to the public,
government need to reform its current policies and integrate PPP.
Next week, we will look at Part B of the same topic. We will
particularly look at how to implement PPP, the crucial issues in reforms, the
best practices in the field by SOEs, and the specific PPP models that may be
considered by the SOEs in the country. Wish you God’s blessings for now.
The writer is taking post graduate studies and living in Indonesia. For
comments and feedbacks, he can be contacted on jackassa945@gmail.com
(email) / +081273238217 (Mobile Phone).
Source: Sunday
Chronicle Newspaper PNG, 23 June 2013
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