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Does The Privatization Commission do any follow up work to see how privatized companies are doing? |
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It must be realized that the Government will often wish to use the results of privatisation for social, economic and political reasons to demonstrate the success of its policies. To that end The PC is setting up an institutional machinery that will help evaluate the results of privatisation in an objective manner. |
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If we sell the public utility companies to foreigners, won't they raise the prices to high for us? |
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Utilities are monopolistic, except the telecommunications sector, which, thanks to rapid innovation in technology, is now very competitive. In the water and electricity sectors we will rely on the good works of the Electricity Council and the water sector regulator (when established) to control abuse of monopoly power. Also note that in the case of utilities, regulation will safeguard the good of all - regulatory authorities must approve rate hikes, which they can do only if they are satisfied that the hike is justified. They may also safeguard public health, such as in the case of water, testing for quality and safety standards. |
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Doesn't privatization mean prices will go up? |
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No, it doesn't mean prices will increase. It doesn't mean they won't, either. They could go up or down or stay the same. The problem becomes one of determining how much of the change is to be attributed to privatisation, and how much to attribute to exogenous factors in market changes and institutions. Sometimes improved efficiencies and reduction of waste can allow prices to stay the same or go down. Other times, the price charged under government is less than what it costs to provide, in which case it is only fair that we all pay what the service or product is really worth, if we want it. This is true for any business, not just privatized companies. |
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How is privatization benefiting the ordinary Malawian? |
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We think the question should be: "what schemes are in place to allow meaningful participation by Malawians?" To suggest that the privatisation programme, on its own, could benefit all ordinary Malawians is perhaps too much to expect from a reform programme that is only a part of a wider reform agenda of the Government. In any event what really is meant by "benefit"? And who is an "ordinary" Malawian? These are not easy questions to answer. |
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Isn't it true that some companies are sold for only $1? |
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That's still not a "give-away" even though at first glance it may seem that way. This is because in the few instances that this has happened, the new owners assumed all the debt liabilities (Chillington Agrimal), or else the company really only existed on paper, like Brick and Tile Company that was absorbed into Portland Cement. If it saves the government from paying millions of kwacha in debt, that's just as good as receiving those millions plus K1. Plus, there's the benefit of people staying employed, and the new owners putting investment money into improving or replacing equipment. |
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