Only the best should lead SOEs

Editorial, Normal

The National, Friday October 11th, 2013

 STATE-OWNED enterprises (SOEs) are generally considered liabilities rather than assets for the government and people of Papua New Guinea.

These government-owned and operated businesses have been dogged by management issues and plagued with financial problems for much of their existence.

Some have been more successful than others, and justified their reason to exist through random dividend payments to the government.

Still, the ailing entities continue to plough on without really knowing what the future holds for them.

The government is their on­ly lifeline. Their only hope of survival lies in the fact they are monopolies.

SOEs or government-owned corporations around the world involved in natural monopolies such as telecommunications, strategic goods and services, natural resources and energy, politically sensitive businesses and broadcasting, are common.

In PNG, state entities have the monopoly on telecommunications, electricity and public water and sewerage systems.

At the turn of this century, the Independent Public Business Corporation (IPBC) was hatched by the government to revamp its ailing SOEs and put them on the path to profitability.

The IPBC laid out its roadmap for the entities to follow, and for a short while, it seemed the government’s business woes were a thing of the past.

Not so, as IPBC became entangled in the politics of Waigani, which severely affected its ability to steer the government’s SOE ship. With the change of political leadership, the O’Neill Government has started to knock some business sense into IPBC and the SOEs by making changes to their top management and scrutinising their financial operations.

Recent changes in the top management of IPBC and Air Niugini highlight the government’s efforts to make SOEs less reliant on the public purse and start making profits for the state.

The issue of effective and efficient management of SOEs has been a thorn in the side of successive governments since independence.

It is a commonly held view that business activities are best left to the private sector, letting  the government concentrate on the affairs of the nation.

One of IPBC’s initial tasks was to privatise some of these government business assets by placing them in the hands of the private sector to own and operate.

It was a commendable in­itiative that would have lessened the government’s financial burden and other problems associated with SOEs.

However, the proposal to fully privatise certain state entities, especially those that had monopolies, drew stiff opposition from sectors of the community and some political leaders.

Little has been heard of the privatisation proposal since then and it seems the previous regime and the current government have totally abandoned the idea.

The O’Neill Government has opted for joint business arrangements for its SOEs and pushed its case with the recent agreement between PNG’s bemobile and Vodafone of Fiji.

However, the deal fell through over some glitch in the contract terms and conditions. The Government is now pursuing a new arrangement with the Vodafone company in the United Kingdom.

A joint venture with Vodafone UK would be a major boost for bemobile, which has been struggling against Digicel, a highly successful international group. 

The Government recognises bemobile’s limited capacity and capability to compete against an innovative outfit like Digicel and is doing the right thing to seek an international partner.

On the other hand, bemobile’s big brother, Telikom PNG, seems to be embroiled in yet another management issue.

Another acting chief executive officer has been appointed to take the helm at the country’s telecommunications provider.

Martin Veisame replaces Charles Litau, who was appointed acting CEO after the removal of Peter Loko, who many considered the best Telikom chief executive since Isikeli Taureka left to join Chevron Corporation almost two decades ago.

We understand that these acting appointments are normally made by the Minister for State Enterprises without consultation with other Cabinet ministers.

While it is the prerogative of the minister to appoint the person of his choice, we hope the appointee is the most suitable candidate to manage such a large and complex organisation like Telikom.

Constant management changes without proper justification can only lead to more problems among the troubled SOEs.