The public services sector lives today in high tension. The announcements by the government of President Gustavo Petro set off alarm bells in a sector that has been transformed in the last 30 years by building a robust institutional framework, guaranteeing private investment, and increasing coverage and quality.
But it was not the only notification. It was also known that the Government, through the Superintendence of Public Services, is preparing a complete reform of the laws that govern these services and that date back to 1994. In addition, the National Development Plan brings some modifications that would change the structure of the sector and until the competition.
From the Trade Union Council, which brings together more than 30 unions in the country, to former ministers, former vice ministers and former commissioners of the Energy and Gas Regulation Commission, including rating agencies such as Moody’s, they have warned about the concerns derived from the recent pronouncements of the president.
Now to these alert voices is added that of former president César Gaviria. And his pronouncement has a particular value: although in his government the country suffered for nearly a year from energy rationing, he also accompanied the National Constituent Assembly that promoted the transformation in the provision of public services in the country and that it materialized with the issuance of public service laws at the end of his mandate.
However, all that scaffolding is now at risk. This is stated by former President Gaviria in a document that he knew exclusively WEEK on national public services.
The document begins with this sentence, in which it describes as “enormous” the improvement in the coverage and quality of public services in the last 30 years, with practically complete coverage in all services in urban areas. However, it recognizes that creative programs focused on completing access to services in rural areas are required.
“This is not the time to destroy what exists and, for ideological reasons, recreate the situation of the past, with all its problems, ills, and shortcomings. You cannot run the risk that coverage will drop, quality will deteriorate and that the country will once again suffer the problems it suffered 40 or 50 years ago,” says former President Gaviria.
The announcements, says Gaviria, frightened the different agents that make up the public services sector. “Given the lack of clarity about the rules of the game for the future, confusion naturally reigns and, above all, investment in these areas is paralyzed. No one can commit large resources in the long term if they don’t know the regulations that the president is going to set and they don’t know what are the legal norms that are going to replace the laws of public services”, explains the ex-president.
According to his analysis, the conditions of stability and predictability that for 30 years allowed the modernization of public services, the increase in their coverage and the linkage of the private, national and foreign sector with million-dollar investments are being broken.
“The foreseeable discouragement of investment has already been noticed by companies in the sector and was clearly stated by the former Mining Ministers and former energy sector regulators in a communication to the national government. These former officials note that, to ensure the supply of energy and avoid a new blackout in the coming years, the country requires large investments in projects to expand generation and transmission capacity. Investments that will not take place if uncertainty and fears about the conditions and regulations that will govern the sector in the coming years continue”, adds Gaviria.
For former President Gaviria, what is being announced is a return to a statist model without private investment. In the document, Gaviria analyzes how public services evolved and why they were so bad before 1991.
“The business organization of state public services was chaotic: most of the entities were dominated by political appetites; professional administrations were scarce; A large part of the companies lacked business plans and adequate planning processes; they were not financially viable due to indebtedness, excessive costs and low income. Tariffs did not cover costs and, for political reasons, were not adjusted (it was common for them to be lowered to satisfy populist promises). As communities rightly argued that it was not fair to pay full rates for bad or non-existent services, a vicious cycle of falling rates, reduced investment, poor maintenance and, ultimately, worse services was created.”
“It does not make sense, as the Government proposes, to repeal laws 142 and 143 of 1994, which have improved the well-being of Colombians. It is inconceivable that, after the country’s experience with its public services, they try to recreate the conditions that existed before 1991, especially the prohibition that the private sector, with capital, technology and know-how, invest in the energy, gas, water, garbage and communications sectors”, says the former head of state.
And in terms of regulation, he asserts that it does not make sense to set aside and ignore the technical commissions in charge of regulating public services, a source of stability and predictability of the rules of the game in Colombia, so that the president assumes the functions regulatory. “Instead of making that mistake, the commissions should be strengthened and the necessary regulations should be produced within them to maintain the quality and coverage of services,” he points out.
However, despite the increases in coverage and the development of the public services sector in the country, there are problems that must be solved expeditiously.
Among them, Gaviria highlights, it is necessary to increase the coverage and quality of services in the poorest urban areas and in rural areas. In addition, it is necessary to solve the problems of the electrical energy services on the Caribbean coast, since it has not been easy to rescue the services of the old Electricaribe and there have been increases in the rate without reflecting an improvement in the service.
The allocation of subsidies for public services to the poorest should also be improved, since there are people who are not poor and are being benefited. And, finally, it is necessary to improve and sophisticate the State’s capacity to monitor, regulate and lead the process of improving public services and infrastructure.
Read the full document on the criticism of former President César Gaviria