’’Regulation of the Regulatory Bodies on Regulatory Procedure in Sri Lanka’’
Posted on January 1st, 2023

Sarath Wijesinghe President’s Counsel, former Chairman Consumer Affairs Authority, former Ambassador to UAE and Israel-President Ambassador’s Forum

Regularization Procedure

Regularization is a part of administration and government process in Sri Lanka and world over often used in governance and delegation of powers to subsidiary bodies and institutions, which is not a successful process in Sri Lanka. In the UK Europe and USA this process is successful such as Rail Regulator and regulatory body’s functions on gas, electricity water which is semi privatized in UK where the companies have set up subsidiary companies as agents on gas, water and electricity regularized by the main companies and the government by way of regulation and in USA where the regulatory process is functioning well especially in the insurance sector thriving in the medical field in the absence of NHS as in UK.  Office of the Rail Regulator in UK (ORR) monitors national highways licensing and operating by the act passed in 1998 running smoothly after the privatization of Rail introducing a new era functioning by the process of regularization successfully. There is a regulatory process in Sri Lanka on transport which is only on paper. Privatization and regularization runs close to each other in UK and the west. It seems Sri Lanka too is planning to follow privatization follows by regularization in some areas such as water and such natural resources. Regularization is a process of acquiring responsibility of managing, running and administering public organizations following the directions answerable to the main authority in given areas. Sometimes regulators go out of control. Today PUSCL chairman acts independently challenging the line Minister and even the cabinet on some policy matters including the price and tariff increases , because he is protected due to appointment  through the constitutional council and his  change needs Parliamentary approval. In USA, and Sri Lanka Consumer protection, Enforcement of Banks and insurance are some areas subject to regularization process in practice. In Sri Lanka one of the main regulators is the Consumer Affairs Authority established under Act o7 of 2003 which is one of the main establishments enacted   responsible for the day to day life of the citizen (consumer) that needs lot of changes and improvements that will be a detailed discussion in a deferent forum. There are many similarities of the way regulatory bodies function in USA, UK, India and Sri Lanka varying the success rates in different degrees. Main regulator CAA is not a successful piece of legislation due to the inherent defects on the implementation   of the intentions of the legislature as anticipated thereby it has been a failure on application. Some of the other regulatory bodies in Sri Lanka are TRC Telecommunication Regulatory Commission set up by act no 27 of 1996, Public Utilities Commission appointed by the constitutional council with independence to act independently of even ministerial supervision set up by act no 35 of 2002, TVEC set up under vocational education act no 20 of 1990 supervised by the Ministry of education, for various purposes in addition to many other regulatory institutions and bodies taking only the above examples for this discussion. Let us ascertain whether these institutions are successful and whether any reforms or changes are required to be institutions for the development and functioning of the governance.

Telecommunication regulatory Commission – in Sri Lanka- is a massive money making institution regulating entire telecommunication process to promote sustainable development in the country and the telecommunication sector originally a government sector privatized with foreign investments and controlling body that brings a massive income to the government. It is similar to TRAI of India –Telecommunication Authority in India that covers India and controlling the entre telecommunication sector as in Sri Lanka. Dialog, ‘’Suntel’’, ‘’Sri Lanka Mobital’’ Hutch , Airteltol, are  controlled by the TRC which is the regulatory authority acts independently as the regulator in the field as a giant business enterprise. Another author functioning is the National Medicine Regulatory authority set up under act no5 of 2015 regulating the drugs which is an important aspect of the citizen.

Insurance and also under the EU directions mostly insurance and health regulatory systems. In the United Kingdom the process of regularization is successful in water and gas In the USA regulatory process successfully functioning for example in the insurance when the health sector is private unlike in UK and Sri Lanka. This is successfully adopted in the private actor worldwide. One of the main regulators in Sri Lanka is the Consumer Affairs Authority set up under act no 9 of 2003 and many others set up under different acts, by laws, executive and processes of administration in many parts of the administrative system. CAA consisting of 77 sections was set up after abolishing the English modeled consumer law system with the new regulatory mechanism based on a mixture of Australian/Canadian/UK regulatory process regulating trade and consumerism in a different way. It was set up with most ambitious intentions which unfortunately have not been achieved    due to the ineffective regulatory procedure. This process may be used for convenience speedy implementation and implementation of jobs with less complications on implementation of government rules and regulations. Regulation is expected to derive optimism and effective results with consumer friendly and less compacted procedure. Regulatory procedure is adopted worldwide in water, electricity, gas, health, Insurance and many other sectors in day to day life and in food, education, health, industry, many areas on regulatory procedures in place of direct governance may be for flexibility and convenience. In Sri Lanka in addition to Education, Health, Industry, Commerce, trade, and many ministries and departments it is worth mention some ordinances linked to regularization as follows.  Trade Marks Ordinance, Prison Opium and Dangerous Drugs Ordinance, Control of Prices Ordinance, Weights and Measures  Ordinance, food and Drugs Act, Control of Prices Act, food Control Act, food Control Possession Act, Licensing of Traders Act, Bureau of Standards act, national Prices Control Act, Consumer protection act, Code of Intellectual Property act, Petroleum Products Act, food Act, Cosmetic Devices and Drugs Act, consumer credit Act, Sri Lanka Standards  Institution act,  fair Trading Commission act, measurements units standards and services act, unfair contracts terms act are some connected to regularization in addition many under various Ministries and Departments in force. It is time to regularize regularly process in the implementation of the most crucial and important sectors such as Private Hospitals, Casinos, Private tuition classes, Trades on various sectors, Hiring sector including three wheel drivers,  Sports especially cricket, and institutions that are inefficient and lossmaking due to bribery and corruption, and many ongoing and future government and semi –  government institutions. They need strict regulations, laws, by laws or special regulatory bodies as citizen is exploited, mishandled, misdirected, and pushed from place to place with no mercy or protection. For example the Casinos, Private Hospitals and Private Tuition Classes are money making centers function freely unregulated with no supervision on  booming and encouraging bribery corruption and inefficiency rampant like air.

Why is regulatory process necessary and adopted in governance?

Why is it necessary and why is it not successful in Sri Lanka. It is necessary as the Public and some segment of the private sector is inefficient requiring efficient and rejuvenation. Most of the regulatory bodies operating in Sri Lanka appear to be not up to the expected standards. Nation as a unit is lazy and indifferent requiring a powerful leadership and a vision of a visionary leader. Obviously regulatory biddies too follow suit accelerated by the corrupt government sector. This shows a regulatory process is needed to the entire nation with a new vision and a program, starting a proper regulatory procedure from schools up to the other institutions such as Hospitals, government and semi government institutions that already has a legal system and a procedure. Regulatory procedure on media is frequent with local and international impact on the image and economy of the country. It maintains with international precedents and standards regulating by different institutions executive and otherwise. It is used in sectors such as Insurance, Electricity, Water, Health, media, Transport, Energy, worldwide in many ways, where traditional governance process is inadequate, convenient or inefficient classic example in Sri Lanka being the TRC (Telecom  Regulatory Commission) and the Telecom monitoring system once backward to wait for years for a telephone connection before restructuring and introduction the regulatory procedure. Many sectors act freely with independence free of rules laws or regulations. Education sector is the cradle of future generation that needs a proper legal and regulatory structure, with no proper rules or regulations for Private Schools and tuition classes thriving with enormous amounts of funding. Vocations Schools have some semblance of regulatory structure yet incomplete and ineffective in the in comparative and other semi-governmental institutions. Vocational Training is an area where the regularization is applied in the respective cooperate bodies.

TVEC tertiary vocational education centers

TVEC – Tertiary vocational Education centers run under the Education Ministry regularizing the vocational and training centers and institutions. Process, Procedure effectiveness and competence of the institutions is in question as the officers are not up to the modern requirements and subject to inefficiency and corruption, acting as a lame duck. This is not satisfactory as the nation today depending on tourism and employment in the recovery process. The line Ministers must take notice of these defective processes and attitudes as an urgent need in the process of recovering the downward trend. Their duties are development of tertiary education and development which is a burning need today due to the shortages of employment lack of trained labor to the foreign market with the fast growing demands. It is noted that it is time to improve and encourage the trained labor to boost the foreign employment market by improving the education and training sector to cater the foreign and local job market. TRC the telecomm nation regulatory commission dealt with previously, PUSCL- the Public Utilities Commission, Condominium regulatory authority, National Transport, Central Bank that regulates the banking system, are few of the many regulatory bodies worth mentioning in the process of the current discussion.  

 Reshaping Economy and Polices with modern Trends

Changes are necessary in development and re – shaping the economy in line with the policies in new directions Electricity, Water, Petroleum, telecom, insurance, Bank, Finance, medicine, Food and drugs,   and consumerism are areas that needs new shaping and vision to meet new trends with unexpected challenges which are proposed and indicated in the budget proposals. Most of these institutions are running at a loss with unpleasant memories and white elephants with burden to the tax payer not serving up to the expectations of the citizen yet compelled to live with. Airlines, electricity, and water are few eating into billions of tax payers’ money to waste.  At the same time regulation is a part of good governance encouraging transparency and efficiency of public and private enterprises and establishments governed by the State with tax payer’s money. Regulations and Regulation is common worldwide and a basic requirement for state and private sector efficiency. There are different kinds and modes of regulation and regulators. Rail regulator in the UK has enormous powers which is followed in Sri Lanka. Public Utilities Board, Consumer Affairs Authority TVEC body set up tertiary education, regulatory body on drugs  TRC telecom regulatory board, Electricity Board, Water Boards in UK and Sri Lanka are some of the institutions on regulating the needs of the citizen parallel to the general administration with somewhat independently managed yet with influence on politicos and line ministers.

Public Utilities Commission

PUSL is the regulator appointed under 35 of 2002 to regulate Energy, Petroleum Water, Telecom and other utilities through the Chairman and members appointed by the minister which is in a way duplication of duties and purposes for which the Consumer Affairs Authority No 9 or 2003 is established. PUSCL is expected to assist, regulate, organize and protect the consumer which of course a replication of the CAA which is the instrument established one year before PUSCL indication that government policies have not properly scrutinized during the drafting process. There is a proposition to do away with the PUSL and there is a protest that it has to be done based on due process and by or strengthen the CAA with a strong regular procedure and promoting competition law which is lacking in CAA act which are ingredients of the purposes of both acts enacted. There is infighting and a media circus with the Chairman Minister and the cabinet on the price increase and number technical issues with unpleasant confrontations with the Chairman who is a multi- milliner – minister and the government alleging has personal and business interests on the price increase and traffics which is unfortunate.

 Energy Sector

Electricity Board act no 20 of 2009 is very traditional semi pollicised ailing statutory body incurring a loss of 85000 million rupees following the normal rigid format without considering the commercial aspect to manage with no loss making and mostly looking for the interest of the consumer by incorporating PUSL (Section 3-7-(e) protecting the consumer when the Consumer Affairs Authority is covering a wider area including the rights of the electricity consumer. Energy sectors are money spinners in other countries. In the United Kingdom the fierce competition of energy companies have brought down the cost of energy and telecom cost while the profit was soaring upwards. In Israel with no natural resources nuclear power has made the energy sector powerful. Sri Lanka is full of natural rivers, waterfalls and sunlight over the year with potentials for wind power in dry seasons. But we are trying to purchase power installed ships in addition imported coal and diesel. This is why changes in outlook and attitudes are needed with out of the box and innovative solution to be taken fearlessly with innovative challenges.

Petroleum Sector

Petroleum Corporation was established by act no 28 of 1961 (chapter 220) to import, export, sell, regulate and deal with petroleum including refinery which before nationalisation under the foreign hands has been a money spinner which now has become a while elephant with the accrued loss of around 1.5 billion when. It is a simple process of buying and selling with price fluctuations based on international markets. Sale of money making fuel stations and leasing of the oil farms which are great value to India for their defence is the most foolish and unwise step taken by a Sri Lankan governance ever which one cannot understand the reason behind when the Indian company formed is running at a tremendous profit margin and when we are in need of storage of oil at time when the oil prices are rock bottom.

Water Sector

Water is an essential element without which the animal kingdom will perish which is in abundance on 80% of the earth and % of the human body. Water is not evenly distributed and in some part of the world and even in Sri Lanka poor walks over miles for water which is so essential for living. Clean and pure water is a blessing to a human body and expensive and cumbersome to find. Sri Lanka is considered to be a wet country with semi desert areas are available in north and Deep South making the peasants to find water for drinking and agriculture. Sri Lankan peasant consumed natural water from rivers, and streams and manmade wells until the introduction of the tap water system by the British on the British Model colleting water on giant tanks after purifying. Water managed by the water board act no 2 of 1974 in chapter 541 at a loss of 505 million when water Is a money spinner many parts of the world including in UK where the pipe water system was introduced to Sri Lanka extracting profit of millions of pounds by way of profits by water companies (Thames ect ) spread countrywide collecting water from the rivers headed by Thames River and smaller river and reservoirs countrywide. In the water system substantial quantity is wasted when water is freely available in abundances to be purified and distributed. Water is sold via distribution centres when % of the population is provided .If most of the regulatory bodies are acting below standards resulting inefficient and unproductive output there is no option but to find a solution to correct the system. One should ascertain why some regulatory bodies are successful in Sri Lanka and many oversees are functioning well. Is it Law, system, attitude or management are matters to be looked into and find answers and solutions. TRC is a (rare) success story on efficiency and profitmaking after restructuring giving some sort of independence of management.

Way forward to success and efficiency of regulatory bodies

Undoubtedly the regularity system and regulatory bodies in Sri Lanka has not been successful due to many factors previously discussed. Then why it is successful in other countries including India? It is the want of concept, procedure, lay out and the implementation with the proper team .It is time regulatory institutions are restructured and regularized by supervisory bodies/or bodies to increase efficiency and proper implementation of the intentions of the legislature. A serious of serious discussions are needed with the governance, legal teams and the line ministers before formulating a detailed and concrete plan with solutions to implement. Hope the line ministers of the institutions discussed will bell the cat for the proposed intended reforms that are urgently and properly implemented to regularize and supervise the regulatory institutions. Author could be contacted on sarathdw28@gmail.com/sarath7@hotmail.co.uk

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