Government considers slight delay in public utility reform

The government is considering delaying the implementation of the law for restructuring state-controlled, non-listed public utilities by a month or two. Changes in the personnel regulations were to have been implemented by April 30, but no steps have yet been taken, despite the fact that the law was voted into law in December, and touted before and since by the government as the linchpin of its economic and state reforms program. Sources close to Economy and Finance Minister Giorgos Alogoskoufis say that the delays are the result of the reluctance, or downright unwillingness, of the utilities’ management to cooperate, despite the fact that the managers are government appointees. Alogoskoufis has called for the ministers overseeing public utilities to meet tomorrow in order to have a clearer picture of the delays and seek ways to surmount obstacles toward reform. Transport and Communications Minister Michalis Liapis said yesterday that the law on public utilities is a significant reform that does not seek to undermine employee rights but to improve conditions in the workplace. He added that the next couple of months will be crucial for the progress of reforms, since employers and the government are to begin a dialogue with unions in order to arrive at a consensus solution. The law on public utilities provides for pay rises of no more than 3 percent in 2006 – the forecast average inflation level – expenditure cuts and a reconsideration of bonuses, severance payments and compensation in kind (e.g. providing Public Power Corporation employees with cheap electricity). The law seeks to eliminate costly and inefficient «under the table» agreements and makes managers more accountable for costly decisions. On pension provisions, specifically, the law provides for their settlement by means of a law, instead of leaving it to the discretion of utility managers. Implementing the reform is seen as crucial for the government and particularly the ministers involved, especially as it has been presented as the boldest reform in years. The utilities sector is crucial both for the state administration and the economy since their investments affect economic growth, their pricing policy has a direct effect on inflation, their operating results directly affect budget deficits and their financing, for which the state acts as a guarantor, can affect the level of public debt if the utilities default on their payments. The law on utilities aims at modernizing their business plans, bringing their operations more in line with listed enterprises, providing greater transparency in the way they are managed and in their financial results. The law limits the number of utilities’ board members to nine and provides for no compensation even if their terms are cut short. It also repeals a provision by a previous law requiring representatives of the Economic and Social Committee – an advisory body made up of employers, unionists and local authority representatives – to sit on the boards. Each public utility is obliged to prepare new internal regulations which have to be approved by the board. The regulations include the utility’s organization chart, including an internal audit office, the various divisions’ competences and the ways in which utility managers’ performance is assessed. New hirings can be made for a trial period of seven months, thus effectively abolishing the existing «job for life» provision. Also, the law calls for a reduction in expenditures on overtime and special compensation for committee memberships or travel.