Pocket the proceeds

21 May 1999

A 96-year-old electrical engineer, Cecil Thomas Melling, was reminiscing enjoyably before some of his superannuated peers a while ago. As a Briton he expanded, naturally enough, on a history that had dominated an important part of his long career – the public ownership of the electricity supply industry in his country. He himself entered the industry early this century and experienced at close quarters the shortcomings that led to its full nationalization by a socialist government in 1947. The intention that electricity supply be a public service actually dated back to a UK law passed in 1882, but there had been a hotch-potch of governmental and entrepreneurial activities during the intervening years.

In his address, Melling mused on the problems to which nationalization had seemed to provide the best solution at the middle of the century. Then he mused on the problems that had arisen from the state's assumption of responsibility.* He recalled illuminatingly some of the errors that had marred the record of public ownership, which had been ended by a right-wing government at the beginning of the present decade, but the anecdote I liked best was the one he told about a private electricity company that had been selling power way back in the 1930s.

Takeover bidders had come along and asked to see the books. The owner had looked askance at his beancounting inquisitors. "I don't hold with accounts", he had retorted. Challenged to explain how he could run so prosperous a business without accounts the proprietor had said that that was easy. When he collected payments from his consumers he put the money in his right-hand pocket. From day to day he met all the expenses out of that pocket. At the end of the month, if anything was left there, he moved the cash into his left-hand pocket and kept it.

That I call practical double-entry book-keeping.

Be a non-governmental resource

“He looked askance at his beancounting inquisitors”

The World Bank claims that two billion of the world's urban and rural poor could be supplied with the electricity that at present they lack. If the developing countries would but adopt the right economic policies, says the bank, they could for example help private enterprise to bring advantageous solar, wind and small hydro power generators into widespread service for the hitherto deprived masses.

'Policies should stop subsidizing monopolies', the bank urges, because they 'rarely benefit the poor and make it more difficult for local energy providers to compete'. Laws and regulations should not keep private or cooperative venturers out of the market to reserve it all for the state-run utility. Generating costs averaged less than 4 cents/kWh in developing countries early this decade but delivery costs of 10 cents/kWh made supply to rural areas uneconomic. Subsidies have been tried but with poor results, the bank reports.

Its vice-president of finance and private sector development has declared that rural energy "should be a key part of the bank's work" and that progress depends on "mobilizing local entrepreneurial and non-governmental resources, and developing rural energy delivery and financing mechanisms". If you want to test what this means, you could try calling bank officer Henri Bretaudeau on (202) 473-3412, e-mail hbretaudeau@worldbank.org. He is probably hoping more for inquiries from stratospheric policymakers than from people at breathing altitudes or ground level, but you never know.

Question teacher with care

An education is good if it fosters independence of thought and an inquiring mind. So the liberal philosophy runs. The products of 'good' education may be becoming a mite too independent and inquiring, however. One Anglophone lecturer in engineering mathematics reports: 'Students have always made mistakes such as replacing 1/a + 1/b by 1/(a + b). The difference is that now, when I try to correct them, they do not believe me and there seems to be no way of convincing them. Some even insist that I must be wrong and they are right'

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