RE: Grid getting updated wires13 Sep 2024 20:40
Dai - this may help:
The Privatisation Paradox: Promised Stability, Delivered Complexity
The privatisation model was initially conceived as a win-win scenario. It promised investors a modest but guaranteed return on their funds, positioning utility investments as stable and attractive options. However, this seemingly straightforward approach has unraveled due to several critical factors:
Flawed Implementation
Poor Contract Drafting: The agreements governing these privatisations were inadequately formulated.
Weak Enforcement: Existing contracts have not been properly enforced, creating loopholes.
Misaligned Incentives
The guaranteed return model has inadvertently encouraged practices that benefit utility owners at the expense of consumers:
Preference for Expensive Options: With returns guaranteed, there's little incentive to choose cost-effective solutions.
Offshore Asset Movement: Companies have been moving assets abroad to minimize tax liabilities.
Financial Engineering: Complex financial structures are being used to further reduce tax obligations.
Government's Role
The government's approach to privatisation has been problematic:
Debt Shifting: By privatising utilities, the government has effectively moved debts off its books.
Political Revolving Door: The privatised utilities have become lucrative post-political career options for former officials.
Misleading Narrative: While the government sold privatisation as a means to increase efficiency, in reality, it was more about transferring debt and responsibilities to the private sector.
In essence, what was marketed as a straightforward, mutually beneficial arrangement has evolved into a complex system that often prioritizes corporate interests over public good.
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