Friday, January 13, 2012

BELIZE- how privatization and public owned utilities worked out in Belize for performance.


There has been a big debate in Belize over NATIONALIZATION vs PRIVATIZATION of Public type utilities.

In a small country like Belize, the BUZZ WORDS of privatization back a decade or more a go, was the thing recommmended by all those so called OUTSIDE FOREIGN expert institutions.
At the time, Belize being a very small population, scattered over a large rugged country, we had neither the skills, economically to do many of the things needed to be done. Particularly in the field of financing of hydro dams, extending utility lines and the like. The privatization brought in outside expertise and it worked, sort of? The small population, unfamiliar bureaucrats and a changing bunch of amateur politicians, were relieved of the problem of doing something that required technical expertise. It turned out the price for this outside privatization was EXPENSIVE. The outside operator, made PROFITS hand over fist. The country suffered BRĂ–WNOUTS a lot, and expansion for a population and country growing exponentially, eventually began to suffer. The service deteriotated, as TAKING PROFITS OUT OF THE COUNTRY became the privatization mantra. Distribution of electricity and cost of electricity started to also climb exponentially on demand of the operator, to maintain investment profit level, in expansion of the services. This reached a point eventually, where the GDP ratio, or the ability of the country economically to advance business investments began to suffer seriously, to suffer and downgrade, due to the constantly annual higher cost of the electricity supplied demanded.

Eventually, the government were smarter, more self educated, in the business aspects and costs of electricity supply and distribution systems and in an effort to lower constantly rising electricity costs, which in turn had been stifling economic growth, the government of the day, NATIONALIZED a bankrupt electric grid and supply system. Not to mention side issues of double bookkeeping and other alleged misdemeanors, in order to enhance profit levels and keep them high, by the outside private operator, at the expense of electric service and rising rate costs demanded.

In review, AFTER the NATIONALIZATION, we found out that the GOVERNMENT owning the public utilities as our educated population grew exponentially, was better financially and service wise, if we did it ourselves. The reason being, the public owned electrical utility, could put FIRST, the need to RE-INVEST earnings back into expanding the national grid, and electrical supply. Profit could become a secondary issue. Whereas under privatization PROFIT was the MAIN ISSUE at the expense of service and higher rate costs, which in turn dampened and choked off business and economic development. It was not particularly that a government could do a better job than a private outside foreign operator, it was simply the MISSION GOALS were different. Whereas the private operator from outside was interested in sucking out PROFIT any way it could, to maintain stock prices on the INTERNATIONAL MARKETS. Whereas the government ownership focused on ECONOMIC DEVELOPMENT, through more rapid expanding services and distribution and if possible, at lower price rates per kwh, to foster the economic climate and GDP growth.

RE-NATIONALIZATION turned out to be a WISE and better choice, performance wise; as the small country and population of Belize grew in population and economics of size. This does not alter the fact that some time in the future, PRIVATE electric producing and distribution companies could probably compete with a Government Public Utility in giving lower rates and better service, particularly in areas where the government is not servicing parts of the population. A mix with the government owned utility is definitely in the cards and indeed already exists in one or two micro populations within Belize. As a young small country we have learned a valuable lesson politically, about PRIVATIZATION and GOVERNMENT OWNED type businesses. You might even say we have become experts and now are smarter than our economic outside world advisers of some decades ago, with their buzzwords of PRIVATIZATION at any cost.

No comments: