XN000022-1986-03-19 — Page 56

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WEDNESDAY, MARCH 19, 1986

IN RESPECT OF PUBLIC PARTICIPATION IN MONITORING THE PUBLIC UTILITIES, SIR JOHN SAID THE PRESENT FORMAL ARRANGEMENTS UNDER WHICH THE EXECUTIVE COUNCIL ACTED ON BEHALF OF THE PUBLIC WERE ADEQUATE AND APPROPRIATE.

THE TRANSPORT ADVISORY COMMITTEE WAS ALSO HEAVILY INVOLVED, HE SAID.

+HOWEVER, THE GOVERNMENT IS ACUTELY CONSCIOUS THAT MEMBERS OF THIS COUNCIL HAVE SHOWN, ON BEHALF OF THE PUR IC, AN INCREASING DESIRE TO BE MORE CLOSELY ASSOCIATED WITH THIS MITORING PROCESS, + SIR JOHN SAID.

+ IT WAS IN THIS SPIRIT, THEREFORE, THAT UMELCO ESTABLISHED THE PANELS ON PUBLIC UTILITIES AND TRANSPORT.+

SIR JOHN POINTED OUT THAT THE BASIS OF CALCULATING PERMITTED RETURN AND THE PERCENTAGE OF SUCH RETURN WERE NEGOTIATED WITH THE COMPANIES WHEN THE SCHEMES OF CONTROL WERE AGREED.

HE SAID ALL ALTERNATIVE METHODS OF CALCULATION WOULD BE CONSIDERED WHEN THE GOVERNOR-IN-COUNCIL NEXT REVIEWED THE SCHEMES OF CONTROL, BUT ADDED THAT +AT PRESENT THE SCHEMES SEEM WELL DESIGNED+.

SIR JOHN SAID THAT IN EXAMINING THE FINANCIAL FORECASTS OF THE COMPANIES AND IN PARTICULAR THE FINANCING PLANS SUBMITTED BY THE ELECTRICITY COMPANIES IN ACCORDANCE WITH THE SCHEMES OF CONTROL THE RATIO BETWEEN SHAREHOLDERS' FUNDS AND EXTERNAL BORROWINGS WOULD BE ONE OF THE MANY COMPONENTS TO BE EXAMINED.

HE ASSURED THAT THE GOVERNMENT WAS INTENT ON SECURING SOUND PERFORMANCE BY THOSE UTILITIES WHICH HAD A QUASI-MONOPOLY POSITION AND WHICH WAS THEREFORE NOT OPEN TO THE FULL WINDS OF COMPETITION. + IT IS EASY TO CRITICISE, BUT WE HAVE CHEAP AND EFFICIENT BUS COMPANIES. OUR ELECTRICITY ON A NON-SUBSIDISED BASIS IS THE CHEAPEST IN ASIA. DESPITE INFLATION PRICES HAVE BEEN UNCHANGED FOR FOUR YEARS. THIS MEANS A DECREASE IN REAL TERMS OF ABOUT 30 PER CENT, HE SAID.

+NO SCHEME OF CONTROL WILL SERVE THE PUBLIC INTEREST THAT DOES NOT ENCOURAGE THE NECESSARY CONTINUED HEAVY CAPITAL INVESTMENT. PROFITS ARE THUS ESSENTIAL. THEY MAY LOOK LARGE TO THE INEXPERIENCED EYE BECAUSE IN MANY CASES THEY REFLECT A REASONABLE RETURN ON THE VAST INVESTMENTS MADE BY THE SHAREHOLDERS, HE ADDED.

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