Using the BT model... By Shahryar
08 March, 2013
The Sui Southern Gas Company (SSGC) has been complaining to the High Court that it is on the verge of bankruptcy. The company has been trying to increase its prices and has, so far, succeeded in reducing the pricing slabs and increasing the per unit price for consumers a number of times. It is understandable that, for a company nearing bankruptcy, their only option is to either increase the income or decrease the cost.
Recently I visited the SSGC head office to find out why they were sending me bills six months late, as the number of units accumulate into a very high figure over the months, subjecting my bill to the highest price per unit, which is five times higher than the lowest price per unit. I found a queue of consumers complaining about their bills. They were being told by a senior billing manager that the SSGC is facing bankruptcy, and that was why the company had to raise the price per unit again (for the 100th time) and if they all followed him to the adjoining room, he would give them a copy of the latest price increase notification for February 2013. I found this manager's duplicity very amusing because, right in front of him, on his desk, I saw three applications for free connection of gas to the homes of SSGC staff.
This manager was giving all these consumers this speech about bankruptcy, while he was finalising the approval of three brand new applications for free connections. If a company is facing bankruptcy, it is its duty to reduce costs first and then increase the price per unit but, in Pakistan, we see that companies like WAPDA, SSGC and PIA, etc, are all giving out free connections and other benefits to their employees, even to retired ex-employees. There is no curbing of expenses and they go on increasing their prices whilst further increasing the misery of the already discontented people. All these companies have no leadership, direction or even a normal audit check on them. This is because we, the consumers and citizens of Pakistan, have no choice but to use these corrupt, inefficient government organisations, which have been given complete monopolies over Pakistan. And it is because of these illegal monopolies that these companies and their lazy staff are not performing their duties for the people of Pakistan and are instead a burden on the entire nation.
The government of Pakistan should use the technique adopted by the British government in the year 2000 for increasing competition in the telecom sector. In the UK, there was a government owned organisation called British Telecom (BT), which had constructed the entire telecom network in UK. This company had a total monopoly in UK and, with their vast cable network, no other company could enter the UK market, let alone compete with BT. However, the service provided by BT was deteriorating and the British government was finding it difficult to privatize it due to its huge size and outreach in the UK.
Therefore, they passed a special law, which froze the prices offered by BT for 15 years and during this time they allowed private companies to enter the telecom market. To reduce BT's influence, the British government allowed all private companies to use the BT cable network for a fixed monthly rate of 10.50 pounds a month. This allowed private companies, with no field experience or team/equipment presence in UK, to be able to sell cheaper calling rates and internet to the UK's consumers, routed through the BT cables. This gave the UK's citizens the cheapest rates, at the same service level as before, giving new telecom companies an edge to start their business, creating new jobs and revenues of tax and, at the same time, introducing healthy competition in the UK telecom sector. Now, after 15 years, the UK telecom sector has more than 25 companies operating while BT has completely restructured its organisation, improving its work and service.
Such a system to introduce new competition would require some creative thinking. However, at least in the case of SSGC and WAPDA, the government can use the BT model used by the UK government to introduce new service providers of gas and electricity, two of the basic requirements for all citizens. This will ensure steady supply, excellent service, best prices, job creation, tax generation and security of guaranteed services of the two most important requirements of the citizens of Pakistan.
SHAHRYAR KHAN BASEER