Public Choice Theory & People of Meghalaya

Patricia Mukhim

Looking at the power sector in Meghalaya has pushed me to read up the reasons for the failure of this vital sector. Even while we speak of digital technology, uninterrupted power supply is a permanent challenge. In fact it is worse today when at the height of winter the paying consumer has to experience power cuts.

The Meghalaya Energy Corporation Ltd (MeECL) is meant to be run like a company where the corporation’s annual books of accounts are duly audited and should show profits to make it sustainable, the MeECL is none of the above. Bureaucrats with no experience or expertise in management have run the Corporation and its other verticals since its corporatization. There have been huge Transmission and Distribution (T&D) losses which the Meghalaya State Electricity Regulatory Commission (MSERC) also headed by a former bureaucrat had been pointing out.

What most of us consumers are not aware of is that there is a Consumer Grievance Redressal Forum which was constituted vide notification No. MeECL/GA.II/270/2007/Pt-I/61 dated 30th November, 2016 & MeECL/GA.II/270/2007/Pt-I/68 dated 2nd March, 2017, with its headquarter at MeECL corporate office, Lumjingshai with the following members: (i) Ms  L  Kharkongor, IAS (Retd), as Chairperson (ii) Mr  J L Rumjang Chief Engineer (Retd), MeECL, (iii) S.K. Lato, industrialist. This Forum is mandated to examine and consider all complaints that it receives and pass orders for the Corporation to remedy the fault or defect within such time as it may decide. (ii) In exercising its function the Forum shall have powers to call for information from the Corporation or any other person concerned and to hear him/her. (iii) In dealing with any matter, the Forum may engage or consult a person having special knowledge or skill in the field. (iv) A complaint shall be disposed of within a maximum period of fifteen days from the date of receipt and the complainant consumer and the Corporation shall be informed of the decision taken.

Under the said Regulations, the grievances may relate to:- (i) Voltage fluctuation. (ii) Erratic supply of Electricity. (iii) Defective billing. (iv) Defective meters. (v) Defective street lights. (vi) Default in attending to routine complaints. (vii) Any other fault or defect which the licensee is duty bound to attend and rectify. (viii)Not giving or delay in giving electricity connection to an applicant. The Appellate Tribunal on Electricity ((APTEL) has directed that, “all the State Commissions/ Joint Commissions and Licensees shall send quarterly written status report regarding the functioning and performance in the approved format (complaints received/adjudicated or settled) to the Secretary, Forum of Regulators who will comply and post the said information online. He would also file a status report in this Tribunal once in 3 months in the Format already approved through the order dated 15th April, 2010.”

The question to be asked is (a) How many times has the Forum met since its creation? (b) Has it taken up suo-moto the issue of indiscriminate power cuts or does it have to wait for a complaint? (c) How many complaints has the Forum redressed since its inception?

The MSERC speaks of the Open Access (OA) system which essentially means that consumers, especially large industrial units can draw power from interstate utilities which is like an open market power supplier since MeECL is unable to supply such power. This is to encourage competition as happens in other states. Now why is this facility not allowed for private consumers? Why can’t other discoms like NEEPCo be allowed to operate in Meghalaya so that consumers are at liberty to buy power from the open market and not be at the mercy of a failed Corporation like the MeECL? The consumer is not bound to support a top heavy, badly run, inefficient  Corporation with excess staff, many of whom are political appointees or relatives of former employees of the Corporation? Why should we be held captive by MeECL which for reasons best known to politicians cannot be privatized?

This brings me to an important point on the Public Choice theory propounded by prominent American economic William A. Niskanen. Public Choice theory is the application of economics to the study of public administration. Dennis Meuller, Emeritus Professor of Economics at the University of Vienna defines Public Choice as, “the economic study of non-market decision making or simply the application of economics to political science.” Meuller’s theory contests the traditionally established public interest theory of democratic government which holds that deci­sion making in government is motivated by selfish benevolence by elected representatives or government employees. In other words, public interest theory presumes that public servants are motivated by a desire to maximize society’s welfare. Both Niskanen and Mueller repudiate this view. They in fact have a very poor view of bureaucracy.

Niskanen’s view is not very different from what most of us hold after years of observing the bureaucracy at work, which is that career bureaucracy is self-aggrandizing and shows indefi­nite capacity for its expansion and continuance. This comes from a very meticulous analysis of the functioning of bureaucracy particularly in democracies. Perhaps this is the first time that the functioning of the bureaucracy has been studied using the methods of economics.

Niskanen has criticizes bureaucracy on several counts and on most of this we the recipients of governance would concur. Firstly, the attitude of the civil servants towards the consumer of their service is different from the attitude of private sector producer to his customers.

Secondly, the producer’s revenue comes from his customers, whereas in the bureaucracy there is no clear correlation between public revenue and expenditure, since the revenue comes from the finance minister (public treasury).

Thirdly, the civil servant unlike the private entrepreneur has little interest to minimize the costs and maximize the profits as he gains nothing financially from such efforts. This is a perfect example of how the MeECL and its verticals are run. No one cares about the consumers and the cumulative losses the Corporation is loaded with.

Fourthly, in the bureaucracy there is no incentive to save the tax payer’s money. On the contrary the bureaucrat is only interested in getting maximum allocations to his/her department. This leads to higher cost of production per unit of services/goods. This in turn leads to disillusionment with the bureaucracy. Much has been written about bringing more efficiency to the bureaucracy but this is a futile wish. It is practically impossible to improve the efficiency of the bureaucracy (think Meghalaya where people come to work after 11 am if not later and leave by 4 PM or earlier). Alternatively can some public services such as power supply be efficiently supplied by other actors?

Alas, Niskanen after a great deal of study concludes that to raise the performance of the  bureaucracy the remedy must come from the private sector where the there is a structure in place for an incentive system for supplying public goods and services. We have experienced this in the telecom sector and the airlines as well. The monopoly of the bureaucracy must be dismantled if the consumer is to benefit. The very structure of the MSERC and the Public Grievances Forum already tell us how each of them is headed by former bureaucrats as if there are no competent people around. The bureaucracy is so self serving and protective of one another that they will create jobs for every retired bureaucrat.

The Public Choice theory is committed to market values and is contemptuous of government monopolies as they hold the consumers captive without providing the services they demand. Niskanen feels that this alone will improve the efficiency of the bureaucracy. If the power consumer in Meghalaya had a choice to buy power from private suppliers, MeECL would have to close shop! Of that I am very sure.

The problem with us in Meghalaya is that we are a long suffering public and unwilling to exercise the option of Public Choice and to register our complaints with the Consumer Grievances Redressal Forum created to address our grievances. It’s time to inform ourselves of the remedies available and to use the appropriate platforms to register our complaints. If people are appointed to certain offices and are paid for it they must also be made to work.

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