Thursday, February 17, 2011

Privatizations in Kosovo

Eciks enthousiastically reports about coming privatizations in Kosovo of elctricity distribution and post and telecom.

I am less convinced. We have had those kinds of privatizations in the Netherlands and the results are rather mixed:

- To my amazement the article talks about the privatization of energy assets. But if it is the same kind of privitization as we have in Holland this basically about a trading company that buys from power plants (and may operate some) and sells to consumers. This has mainly led to the rise of some dubious companies who promise cheap rates in your first year. And when you forget to cancel you pay much higher rates in the second year. So I don't see much benefits. And I don't expect it will help solving Kosovo's energy problems.
I am not sure what will happen with the physical infrastructure. In Holland that stays government property. Selling it would give the buyer a monopoly position. Few companies can resist the temptation to abuse such a position. And it is very difficult to write a contract that reconciles the governments aim of 99.9% uptime with the interests of a company that would make maximum profits at a much lower uptime.

- We have privitized the postal services. The result is that a number of competitors have arisen that pay a piece wage that is so low that its workers get less than the minimum wage. (In the past this would have been illegal but we live in strange times nowadays.) Under this pressure the traditional monopoly holder has steadily worsened its labor conditions. As a result our postal rates are rather low. But while the managers and politicians are crowing about the efficiency of the market it is in effect just oldfashioned exploitation of the workers.

- you can easily privatize mobile phone. You can also privatize service over the fixed lines like calling to other countries and internet. But the lines itself stay a natural monopoly and there is no easy way to privatize that. Here in Holland the main competition of the fixed line operator is the cable company. Together they form a natural duopoly. It looks like the fixed line operator is giving up on upgrading while the cable operator is slowly expanding its internet and phone services. But neither is investing in glass fiber, the supposed medium of the future.

1 comment:

Gerard Gallucci said...

And privatizations in Kosovo raise the question of who really owns what. Are the assets that Pristina wants to sell or has "sold" -- be they electricity, telecoms or Brezovica -- really Kosovo's to decide? Serbia and Srerbian entities have in many cases strong claims as well. Whoever "buys" these assets may have legal problems over ownership later. These are really status issues.