Stockholders vs stakeholders

I have always believed that the government of a country - especially one as relatively poor as ours - should never sell controlling shares of any essential service to a foreign concern (that is obviously only investing for a profit and not for altruism).

In 2001, when the controlling shares of the Jamaica Public Service Company (JPS) were sold to Mirant, a US-based energy company, I was beside myself with dis-appointment and expressed it publicly. The finance minister of the day asserted that no local concerns/investors took up the offer. I don't know if the offer was made to a large enough prospective group or in a flexible enough format to attract a wide variety of investors.

Aside from the eventual economic backlash of selling off potentially large income earners and essential services/ businesses to outside concerns, I am of the view that the loss of such staple financial entities is psychologically devastating to our people. It lowers our self-esteem and demolishes our self-confidence, two important ingredients for our recovery.

The recent loss of our flagship airline, Air Jamaica, was very depressing. The new owners are only going to do what we should have done all along to make it viable: instigate and enforce stringent management principles. I won't say more on what caused the 'crash-dive' of Air Jamaica because it is speculative and potentially damning.

Recently, some senators branded, JPS "exploitative, burdensome and extortionist". In spite of its innumerable negatives, I would not label JPS 'extortionist'. It took a mighty long time for the movers and shakers to rouse from their obtunded state. It seems that they are only just now realising that a monopolistic light and power company with its own economic agenda can and will wreak havoc on any country.

'Exploitative'

In all fairness to capitalism, if a business based in a developed economy invests in a business based in a developing country, it must be 'exploitative' in order to ensure a profit for its investors. If it does what it must do to achieve that goal, it will become 'burdensome' to the citizens of the developing country. After all, the company must earn enough Third-World profits to satisfy their First-World investors. Therefore, as I wrote in The Gleaner (June 28, 2010), don't blame JPS - we are at fault.

A major thrust of overseas investors is to ensure proper management and reduce unnecessary losses to theft and power transmission. Entire communities have not paid for their electricity supply for many years. This was no secret; those communities were simply labelled as 'red zones' by the utility companies.

I know someone who has been operating a factory out of one such red zone for a very long time. This year is the very first time that he has paid for electricity ... he is now paying about $130,000 per month. Over the years, he alone has consumed many millions in electricity without paying a cent - all because of politics (he lived and worked in a garrison community).

And so it all comes down to the stockholders vs the stakeholders. All stockholders are stakeholders, but not all stakeholders are stockholders. Therein lies the problem. For example, the average Jamaican is a stakeholder in JPS. We are directly affected by JPS's policies and actions. However, we are not (majority) stockholders and, therefore, have little say in JPS's management decisions.

Because the cost of electricity severely impacts everything, our politicians should have considered us (the stakeholders). They should not have relinquished our controlling influence over our sole light and power company until the matter of feasible competition for the JPS was resolved.

Garth A. Rattray is a physician with a family practice. Email feedback to columns@gleanerjm.com and garthrattray@gmail.com.