SOEs issue SOS calls

At a time when banking scam and money laundering were making screaming headlines, the debt incurred by state-owned enterprises (SOEs) was relegated to the back burner. Now the Finance Division under the Ministry of Finance has identified 19 of the 122 SOEs in precarious financial positions with a total debt burden of Tk2.2238 trillion. This news carried in this newspaper's Sunday edition is followed by another related one next day concerning the opening of 44 SOEs to private investment. Mounting debt liabilities of key enterprises operating across diverse sectors have virtually brought them on the verge of collapse. Their poor financial performance, as the Finance Division's review found, has rendered cost-recovery ratios far below sustainable levels. The energy sector in particular has more than half of the total debt liabilities. Bangladesh Power Development Board (BPDB) alone accounts for an outstanding debt build-up of Tk1.784 trillion followed by the Gas Transmission Company Limited (GTCL) with a debt liability of Tk141.31 billion.
A country's development, leading economists and experts in national development claim, is directly linked with energy consumption. In fact, it serves as the backbone of socio-economic progress. When the energy sector is in a shambles with mounting debt burden, a country has to pay for this lapse through its nose. The government has to come forward with public finance when such essential services fail to earn enough revenue against the expenditure they make. In this connection, the Bangladesh Investment Development Authority's (BIDA's) move to open 44 SOEs to private investment may make sense but the sectors involved here are not as integral as the BPDB or GTCL. Apart from the energy sector, enterprises in the transport, manufacturing, SME development and public service are far more important than the 44 SOEs offered for private investment. Loss-incurring SOEs in the vital areas, therefore, act as a thorn in the government's neck.
Then why do such enterprises fail to meet up the costs with their revenue income? Irregularities and inefficiency explain their mounting losses. Public entities in this country are mired in massive irregularities as regulatory oversights are next to nothing. When accountability is a casualty with a government allowing indulgence to people in high positions, as was the case during the past regime, employees and officials down the rank consider utility services a platform for serving their own interests. So, there is a need for restructuring the entities like BPDB, Bangladesh Petroleum Corporation and Titas Gas Transmission and Distribution PLC.
The bottom line is to bring about transparency, accountability and efficiency in the operation of SOEs. This calls for urgent reform. If private companies can generate power profitably---albeit on a small scale, why should SOEs incur massive losses? A report carried in a contemporary on a closed jute mill in Sirajganj claims that its security costs the government Tk0.6-0.7 million each month. This is how industries in the public sector are rendered non-viable and even when they are not running, they cost the government a sizeable amount. There is no guarantee that handing those over to private parties will address the problem. Such trials also ended up in looting of equipment and machines. So the need is to streamline the operating method and system of SOEs through comprehensive reforms.