Addressing SoE losses without hampering operation
Although the state-owned enterprises made a profit of Tk 24.9 billion in 2009–10, as mentioned in a New Age report on Sunday quoting a strategic paper prepared by the finance ministry, they incurred Tk 80 billion and Tk 168 billion in losses in 2010–11 and 2011–12. Worse still, the paper has projected the loss for the current year to Tk 176.5 billion which accounts for 2.2 per cent of the gross domestic product. Meanwhile, the strategic paper has blamed ‘mainly soaring operational costs coupled with mismanagement’ for all this. As the paper pointed out, the total operational cost of all SoEs may rise to Tk 1500 billion this financial year from Tk 1250 billion in the past year although it was just Tk 649.6 in 2009–10. Needless to say, the salary and perks of officials and employees of the entities concerned did not undergo any significant increase in the period. Arguably, it has become imperative to investigate seriously to prove the allegation that the staggering increase in the operational costs does not involve corruption and irregularities, especially, by the top brass of these organisations.
It is important to note that the enterprises in the public sector include, on the one side, different industrial units and commercial ventures and, on the other, the ones that provide essential services such as water, electricity and gas for the people. Additionally, the losses incurred by all those organisations hugely cost the state coffer in the form of subsidies. Hence, there is no reason to take the losses at hand for granted. But, at the same time, one needs to distinguish between the subsidies given to state-owned commercial entities and the service providers. To be precise, while the former are expected to be commercially viable, the latter essentially need to concentrate on the quality of their services, of course, keeping the cost within the reach of people in general and the low-income groups in particular. However, it is also true that industries and commercial institutions in the public sector are there to play a crucial role as far as the equitable development of economy and society combining public and private enterprises is concerned. In this context, wholesale privatisation of the public entities in a bid to offset losses can never be an effective option. In addition, application of this option earlier to many losing public entities has largely failed to deliver.
Overall, the incumbents need to take effective steps to significantly reduce the operational costs of the SoEs without hampering their operation that involves huge public interest implications.
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