Regulatory powers with Public Utilities Commission at the apex | Sunday Observer

Regulatory powers with Public Utilities Commission at the apex

20 December, 2020
The Moragahakanda hydro-electricity plant
The Moragahakanda hydro-electricity plant

Changes are necessary in development and re-shaping the economy in line with the policies, in new directions on electricity, water, petroleum, telecom, insurance, bank, finance, medicine, food and drugs. Consumerism regime needs new shaping and vision to meet new trends with unexpected challenges, which are proposed and indicated in the budget proposals.

Regularisation in the private sector is self-regularity and is done via professional organisations which is also a need of the era for development and economic prosperity of a nation. Most state institutions are running at a loss despite regularisation, with unpleasant memories of loss making white elephants burdening taxpayers and not serving up to the expectations of the citizens. It seems that the country has trust in regulation for checks and balances with prevention of fraud and bribery. Regulators are paid the highest respect worldwide.

Taxpayers’ money

Airlines, electricity and water are a few institutions eating into billions of taxpayers’ money showing the need for fiscal and management control with a stringent regularisation system. Regulation is a part of good governance accepted worldwide encouraging transparency, proper administration and efficiency of public and private enterprises and establishments governed by the State with taxpayers’ money.

Regulations and regulatory powers are a common worldwide scenario and a basic requirement for state and private sector efficiency and or matters connected therewith or incidental thereto.

The Consumer Affairs Authority Act of 9/2003 was established for effective competition, regulation of international trade and prices of goods and services protect consumer and streamline trade while balancing the regulator, trader, industrialist and the consumer as a main regulator of the nation.

There are different kinds and modes of regulation and regulators. Part one of the Public Utilities Commission Act of 35/2002 states that that it is established to regulate certain utilities industries pursuant to a coherent national policy. In every regulatory body, the policy of the state is given prominence in the formulation of the regulations.

The rail regulator in the UK has enormous powers which is followed in Sri Lanka in a different way in various institutions. Regulation and regulatory powers are a part and embodied as an appendix of many statuary bodies and private enterprises in the private sector.

The topic thrown to the arena today is steps taken to change the working of the regulatory powers of the Public Utilities Commission of Sri Lanka (PUCSL) in which the facts are not clear except for the letter to the Commission with a request to restructure the Commission for which the Ministry of Finance has a legitimate right as the line ministry. It is not clear on the mandate of the part of the constituent body of the PUCSL as it is an independent institution expected to act freely and independently with no directions either from the executive or the legislature in the complex involvement of the finance minister and the complexities of the 20th amendment in force.

Discussion revolves round with the media coverage on the proposed changes to the PUCSL set up in 2003 as a main regulator on the apex, in addition to self-regulatory arrangements in institutions mentioned above. Regulation means monitoring control of sector businesses by the Government.

Public Utilities Commission

There are formal rules standards that dictate which is acceptable and required behaviour putting limits where permissible. Regulation could be in the public as well as the private sector, sometimes self-regulation on competition and competitive law specified the Public Utilities Commission, Consumer Affairs Authority Act of 9 of 2003 and other statutory bodies.

The PUCSL is the regulator appointed under Act 35 of 2002 to regulate Energy, Petroleum, Water, Telecom and other utilities though the Chairman and members appointed by the minister to be approved by the constitutional council and to manage as an independent body on its own.

It has effective (Sections 14 to 18) powers which may not be to the liking of the politicians, electricity mafia or the administration with ulterior motives and iron fist administrators.

The Consumer Affairs Authority was established under Act No 9 of 2003, a mixture of UK, Australian model to regulate trade and look after the interest of the consumer, trader, and industrialist which has not changed since then and requires many adjustments and /or full amendments to the Act in keeping with the modern trends.

The CAA and the PUCSL encourage competition and look after the interests of the consumer while maintaining equilibrium among the consumer, trader, industrialist and the regulator that is the state, which is in a way a duplication of duties and purposes for which Consumer Affairs Authority No Act 9 of 2003 is established.

The PUSCL is expected to assist, regulate, organise and protect the consumer which is a replication of the CAA which is the instrument established one year before the PUSCL indicating that Government policies then have not properly scrutinised during the drafting process.

There is a need to amend and restructure the regulatory bodies and regulatory process in conformity with the needs and shaping of the economy for the current challenges, especially when the nation is struggling with the Coronavirus episode which appears to persist for some time.

There appears to be no coherent strategies or serious discussions on the preparation and drafting processes of the CAA and the PUCSL set up in 2002 and 2003 and setting up of other institutions during same periods arising a necessity to rethink and look back on all the regulatory process with new models and thinking in terms of new challenges.

Energy sector

The Electricity Board is a traditional semi-politicised ailing statutory body incurring a loss of billions (85,000 million rupees for a few years) following the rigid format without considering the commercial aspect to manage, loss making and mostly looking for the interest of the consumer by incorporating the PUSL (Section 3-7-(e) protecting the consumer when the Consumer Affairs Authority is covering a wider area, including the rights of the electricity, water and consumer generally.

Energy sectors are money spinners in other countries whereas in Sri Lanka, it is a haven for ‘’Mafia’’ monopolised by a group of engineers minting money with the assistance of politicians and cronies. Break through this is a challenge.

In the United Kingdom, the fierce competition of energy companies has brought down the cost of energy and telecom cost while the profit is soaring upwards.In Israel with no natural resources, nuclear power has made the energy sector powerful. Sri Lanka is full of rivers, waterfalls and sunlight over the year with potentials for wind power in dry seasons.

Sri Lanka with ample natural resources and an educated population with rivers round the county, water falls to generate power, full of wind waves right round the island was planning to buy electricity from a ship.

This is why changes in outlook and attitudes are needed with innovative solutions. Regulation is interwoven with energy provision, bonding both together which extends to other institutions.

Consumer Affairs Authority

The CAA through Act 9/2003 was established for better protection of the consumer through the regulation of trade by promoting effective competition by establishing an authority headed by a Chairman and members with a director general for the purposes set out in detail with a power structure to perform duties to society.

The regulatory procedure is set out from Section 9 and with wide areas to cover on section 75 which is exhaustive to perform duties and fulfil the requirements. It is outdated and requires complete overhaul and amendments, introducing a new Act or merge with the PUCSL updating the status.

The Petroleum Corporation was established by Act No 28 of 1961 (chapter 220) to import, export, sell, regulate and deal with petroleum, including refinery which before nationalisation was under foreign hands managing with billions of profit margins. It has been a money spinner which now has become a white elephant with the accrued loss of around 1.5 billion when it is such a simple process of buying and selling with price fluctuations based on international markets.

This institution needs restriction and a complete overhaul. It is a pity that the most lucrative money making sources, outlets and oil tanks were given to India. One cannot understand the reason behind this when the Indian Oil Company is running at a tremendous profit margin and when we are in need of storage of oil when the oil prices are at the rock bottom.

Water sector

Water is an essential element without which the animal kingdom will perish. Water is not evenly distributed and in some parts of the world and even in Sri Lanka, some people walk for miles for water. Sri Lanka is fortunate to heave 16 rivers running over 100 km, 28 rivers up to 100km, 40 dams, and 61 waterfalls. Pure water is a blessing to people. Sri Lanka is considered to be a wet country with semi-desert areas in the North and deep South.

Sri Lankans consumed natural water from rivers, streams and manmade wells until the introduction of the tap water system by the British on the British Model collecting water on giant tanks after purifying. Water is managed by the Water Board established through Act No 2 of 1974. Water is a money spinner in many parts of the world. The Sri Lankan water system is poorly managed with 40 percent wasted when water is freely available in abundance to be purified and distributed. Water is sold via distribution centres when 60 percent of the population is provided tap water.

Way forward

It is agreed that a regulatory process is necessary though it may not be palatable to some shortsighted persons in high positions in a hurry to get things done for reasons known to themselves. “Regularisation’’ is a scientific art in administration which is vital for efficiency and sound management.

It is a pity that the policies and the working arrangements have not been streamlined during the drafting and implementation of legislative processes for clarity and to avoid duplication. Today things have changed with the new world order and the coronavirus pandemic which has transformed the lives of the people world over compelled to transfer to the digital age prematurely on compulsion.

Drastic changes are required, including changes from the grassroots levels from redrafting the legislature to the appointment of the proposed body by the constitutional council for a more efficient and successful ‘’Regulatory Regime.’’

The writer is a President’s Counsel, Solicitor in England and Wales, Former Chairman, Consumer Affairs Authority.