Renegotiating Hambantota
View(s):It was raining cats and dogs on Wednesday night. The next morning, though, it had ceased and the trio – Kussi Amma Sera, Mabel Rasthiyadu and Serapina – was having a relaxed chat under the margosa tree.
In the distance, the ‘choon paan karaya’ could be heard going down the lane with his distinctive ‘tune’ blaring from his ‘tuk-tuk’.
“Mama kalpana karanney aei desambera maase mechchara wessa thiyenne kiyala (I wonder why it is raining so much in December),” said Kussi Amma Sera. “Maha kannayata prashnayak vune nethnam hondai (I hope it doesn’t affect the Maha cultivation season),” noted Serapina, adding: “Digin digatama wessoth sahal saha elavalu milata balapai (If it continues to rain, there will be an impact on the prices of rice and vegetables).”
Joining the conversation, Mabel Rasthiyadu said: “May avurudde boho denekuta gang-vatura prashnayak thibba (This year many people have had problems with floods).”
The margosa leaves were still wet and raindrops were slithering along them and falling on the trio who ignored these while munching ‘maalu paan’ and drinking the morning cup of tea under the tree.
As I prepared to write this week’s column, looking out of the window to collect my thoughts, the phone rang. It was ‘Koththamalli’ Fernando, the Kokatath Thailaya (oil for many ailments) expert who has a remedy for any issue. I hadn’t spoken to him for a while and relished a conversation hoping this would help me decide on this week’s topic.
“I say, I heard they have appointed a committee to decide on the heads of state agencies and recommend only competent people. That is a good move,” he said.
“On that point I agree but it is likely that a percentage of political favourites will also make their way to this list,” I responded.
“Agreed, but reports say they are cutting salaries and perks of heads of these institutions. Presumably, only those willing to serve faithfully and diligently would be appointed,” he said, adding: “I hear that some from the private sector who are coming on board are doing so without any payment whatsoever.”
“If that is the case, it’s a good gesture and some decent work would be done,” I said, recalling a news report where a former head of a state agency was paid a princely Rs. 20 million. Whether it was per month or annually, the article didn’t indicate. Either way, it was a huge salary.
As we were conversing, my mind strayed to an article that ran in last week’s Business Times where the former head of the Information and Communication Technology Agency (ICTA), Prof. Rohan Samarajiva reflected on: ‘Ensuring good performance by boards of SOEs’.
He wrote: “We are in the season of appointments: of Ministers, State Ministers, Chairmen, Directors, etc. There is always hope that the appointments to the Boards of State-Owned Enterprises (SOEs) will be different this time around and will yield good results. Some will. But many will be seen as falling short. Is the problem structural? Does it require a remedy more complex than simply running names through a committee?”
He added: “In February 2015, in these pages, I proposed performance contracts for appointees to the Boards of commercially-oriented SOEs (‘Accountable Management of Government Owned Enterprises’, Sunday Times, February 1, 2015).”
That I thought, while straying a little bit during my conversation with ‘Koththamalli’, was a good idea to ensure these heads of corporations and state agencies have a mandate to fulfil during their tenure. For example, if a chairman or CEO in the private sector doesn’t perform to ensure profits, he or she is removed by the board of directors. However, it’s easier said than done in the public sector, where rules and regulations, rather than improving performance, in effect stifles performance as bureaucratic processes are cumbersome, slow-moving and disconnected to the modern way of running an organisation.
Prof. Samarajiva refers to many constraints in running a state organisation and points out: “Given these constraints, it would be hard to hold the CEO accountable for timely delivery of outputs. This may be why formal performance indicators rarely apply to heads of government departments. Instead, they are held to informal performance measures, mostly relating to keeping the staff happy, avoiding disasters and scandals, organising the right kinds of ceremonies with due prominence to appropriate dignitaries and so on.”
In this context, it’s difficult even for genuine and sincere heads of organisations, who want to turnaround loss-making state agencies, to make a major difference in the way things are done. To some extent it is possible but in their five years or less term (the period of a government), trying to turn a loss-making agency into a profit-making or break-even one is a gigantic task. Unless, of course, the structures and bureaucracy are organised in such a way that the ARs and FRS are performance-related, rather than focusing on processes before performance. The end – a good performance – should justify the means, though in SOEs, it’s the other way round: Don’t permit a way of cutting costs and improving profits, if it means bending rigid rules and structures.
For the record, SOEs are bleeding money from the state. According to official data, 89 public enterprises showed a deficit totalling Rs. 57,158 million in their financial results for 2017/2018.
Even profit centres like the Ceylon Petroleum Corporation and the Ceylon Electricity Board have recorded losses largely since other state agencies have delayed payments for power and fuel supplies.
As I wound up my conversation with ‘Koththamalli’, there was another issue that I thought of discussing today: This is the new government’s dealing with multilateral agencies like the IMF, World Bank and the ADB and countries like China and the US.
It has been reported that the government is seeking to re-negotiate the pact with the IMF and also the deal with the Chinese on the Hambantota port. While this is the right of any sovereign nation, it is incumbent that there is no attempt to totally change these contractual obligations.
In this context, it was reassuring to note a statement by President Gotabaya Rajapaksa that the government doesn’t intend changing the agreement with the Chinese company running the Hambantota port as it’s an “internationally-accepted contract that cannot be changed”. Rather the change needed, he asserted, was to ensure that the security aspect (whether Sri Lanka controls the ships that come in) is in government hands.
Likewise, the IMF agreement and those with other multilateral agencies (including the one proposed with the Millennium Challenge Corporation – MCC) shouldn’t be discarded but renegotiated if the new administration feels that there are areas of concern that need to be addressed.
I look at the clock. Whew! Time has flown and my deadline is approaching. Serapina, having finished their margosa-tree conversation, brings in, this time, a cup of coffee which I had requested, saying, “Mahattaya, December maase purama wahina-wada? (Sir, is it going to rain all December?”
“Mama balaporottu novemi (I hope not),” I reply, wistfully hoping the rains won’t spoil the Christmas and New Year season.