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Supreme Court raps Central Bank over promotions
A retired senior economist of the Central Bank last year was critical of the Central Bank and some of its actions saying there was no independence at the bank. "I am able to say this because I have left the bank. If I was still a staff member I will toe the official line and keep my lips closed - so to speak," he told a highly amused audience.

The independence of the Central Bank - whether it takes an independent view on the economy or toes the government line - has been the subject of debate for many years. The common verdict is that the bank is a highly politicised institution particularly because the governor is a political appointee. Officers are reluctant to express their "honest" opinion on various issues for fear of incurring the wrath of superiors and risk being victimised.

Being unable to articulate independent views on the economy is not the Central Bank's only problem. Promotions to key positions at the bank, considered one of the most crucial institutions in the country, have been questioned by the Supreme Court.

The court, in a judgement last week delivered by Judge Mark Fernando along with two other colleagues, passed severe strictures on the recruitment/promotion procedures of the bank. It held that the appointment of W.A. Wijewardene as a deputy governor was irregular as proper procedures had not been followed.
It was a landmark judgement and old timers of the bank say such incidents are rare in the bank's history. A detailed report of the court case is on page three.

The court said the criteria for selection in the appointment of Wijewardene was "uncertain, undisclosed, confusing, anomalous and inconsistent, with no indication of weightage and the second respondent (Governor A.S. Jayawardena) as well as the board had failed to evaluate the candidates by reference to those criteria and failed also to comply with the prescribed procedure of obtaining the candidate's self-assessments.

"There was also a lack of consistency in the application of the criteria. Over a nine-month period the board appointed five AG's (assistant to the governor) - Ms. A. in September 1999, three AG's in May 2000, and Mr. J. in June 2000. In the case of Ms. A. and Mr. J, the appointments were by the board first to the special grade followed by designation as AG but the other three AG's were appointed by the governor first as AG's and then promoted to the special grade.

"The selection of the former two was not by reference to any special area of responsibility unlike the latter three. Ms. A. was promoted on the basis that she was the most senior head of department but Mr. J. was promoted although he was almost the most junior and lacked even five years experience, thus virtually ignoring seniority. In the case of the other three, they were from among the ten most senior heads of departments and thus seniority was given more weight. For all these reasons, the appointment of the third respondent (Wijewardene) as AG was flawed," the court held.

These are serious issues raised by the Supreme Court and calls for rethinking on the part of the Central Bank. There is also a debate in the bank and often outside about whether appointments should be made on seniority and experience or on merit.

Both arguments are valid. The state sector, in particular, is burdened with senior officers who have many years of experience but happen to be inefficient. The promotion-on-merit argument is valid in such a case if the public sector is to be made efficient.

However, appointments on merit could lead to discrimination. What if a boss overlooks a senior employee just because he doesn't like him or her and prefers a junior worker and calls it a "merit-appointment"? According to Central Bank sources, recent promotions have caused a lot of heartburn with senior people being bypassed in favour of junior officers as in the case that went before the Supreme Court.

One of the reasons why Sri Lanka's productivity is low is because there is no place for efficiency, particularly in the state sector. Officers remain in positions for too long, get extensions and deprive more efficient younger staffers a chance to reach the top. That leads to frustration and discontent among junior officers who suffer in silence rather than leave and forgo their pension rights.

The merit-promotion argument is a valid one as long as politics doesn't come into the picture and there is no favouritism in appointments.

Phone operators disagree over pricing proposal
By Akhry Ameer
Fixed telephone and mobile phone operators are at loggerheads over pricing in the proposal to introduce the Calling Party Pays (CPP) concept. The fixed operators disagree with the pricing that has been proposed by the mobile operators.
They claim that the termination charges requested by mobile operators are relatively higher than the fixed operators. Fixed phone operators have proposed the charge be made equal.

CPP means that when someone makes a call (the caller), the receiver would not have to pay any charges for receiving such a call. Instead, the charge borne by the receiver would be passed on to the caller. This means that all calls received on mobile phones would be free. With the introduction of CPP, higher call charges are inevitable and the increase is supposedly as much as three rupees or even higher.
The termination charge is a component that is charged by the calling party's operator to hand over the call to the receiving party's operator. This charge, though in reality charged by the calling party's operator, is passed on to the receiving party's operator. All operators view the termination cost as the component that is used to recover their capital investment.

When a call originates from a fixed phone to a mobile phone, the termination charge is higher, as the mobile operators have requested a charge varying from Rs. 3.00 to Rs. 7.40 depending on the time the call is made. Alternatively, when the call originates from a mobile phone and terminates at a fixed phone, the fixed operators have requested a charge in the region of Rs. 1.60 to Rs. 3.80.

Fixed phone operators contend that this needs to be made equal both ways, i.e. Rs. 1.60 to Rs. 3.80. If this is not done, the fixed operators say that their customers would have to bear an unrealistic price increase, which on average would be around Rs. 3.00 to Rs. 4.00.

Mahinda Ramasundara, Technical Director, Suntel Ltd. speaking on behalf of fixed operators, said: "Investment for fixed operators is higher, almost $1,000 per line, while for the mobile operators it is only $250 - $300 per line." Fixed phone operators couldn't burden their customers with heavy tariffs as they have to pay more money to obtain a connection.

Ramasundara also alleged that the TRC is trying to implement the CPP system without following the findings made by the TRC appointed committee that conducted public hearings for all stakeholders including the consumer. The Committee recommended the re-balancing of local and international tariffs to be implemented in two slabs and the adoption of a national numbering plan prior to the introduction of CPP.

Under the numbering plan, mobile and fixed operators are identified using different sets of prefix codes. Currently, two of the fixed operators, Suntel and Lanka Bell have 074 and 075 respectively as prefixes that are similar to mobile operators.
This is to make consumers aware that they would have to incur higher call charges when making calls to a different type of operator.

Dr. Hans Wijayasuriya, Chief Executive/Director, MTN Networks (Pvt), while reiterating that CPP is a cost-based pricing formula, said: "It is not about fairness. We have followed a structured approach in developing the pricing. We too have compensated on pricing, like the fixed operators. If both sides compensate, the industry grows."

The infrastructure of mobile operators, unlike fixed operators, needs to be duplicated to provide mobility. "For example, the mobile traffic in Colombo is not the same in the night. Similarly the traffic increases in adjoining areas like Battaramulla in the night indicating that the users in Colombo have moved to their homes by this time. Therefore, we need to have similar infrastructure in both places."

Dr. Wijayasuriya said they had identified three distinct communities, the corporate, the residential user who has both a fixed and mobile line and those who only have access to either a fixed or mobile line. In the case of fixed phone consumers who have access to both lines, the CPP actually means a shift of part of the charges from one to the other. "Our study went to the extent of providing lower termination charges to the residential user than the business user. We are very confident that CPP is not going to be a great hindrance. This only throws an open challenge to the fixed operators to expand their networks as the mobile operators have done," he said. Had the CPP been implemented earlier this problem would not have occurred, he added.

R.D. Somasiri, TRC Director General, acknowledged that both parties had submitted their cost proposals and that the cost per minute remains the crux of the matter.
The pricing will not be accepted as presented by the operators, he said. The TRC's position is that it should be cost-based with reasonable profits to the operators, he said.

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