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Saturday, October 4, 2008

Monopoly Increases


What does all this numbers have in common?

These are the most recently announced net profit after tax (in million) for SBS Transit, Comfort Delgro, SMRT and Singapore Power respectively.

And what do these organisations have in common?

All of them have or had recently announced increase in prices for the services they provided, namely bus and MRT fare, taxi fare and the last one - electricity tariff.

Who feel the pinch of these increases? Definitely not the rich - they don't take public transports and if they do, it's taxi and what is a few dollars when what they earn in a month is more than what most men in the street earn in a year?

All these organisations are providing a service that is considered a necessity and yet because they are private companies, year in year out they continue to increase their fees even though they are making good profits all for the sake of enriching the shareholders. So what happened to the age old convention wisdom that basic necessity services should be provided by government to prevent profiteering? In my younger days, I remembered studying economics and how they talked of why government should provide the basic services otherwise leaving such services in the hand of private companies would drive the prices beyond the reach of the poorer citizen Did I remember wrongly?

The 3 transport companies are all making good money. Look at their profit figures. In addition to revenue from fares, these companies also made money from rental income, advertisements, charter etc. Why are these not taken into consideration when the PTC approves the increases? In bad times, Singaporeans are told to tighten their belt and utilise their savings for the rainy days. What about corporate Singapore? Shouldn't they too dig into their savings to absorb the increase in fuel prices etc?

And SP has the most laughable reasons why electrical tarrif has to increase when crude oil prices is falling. Like some people had pointed out and SP has admitted, S'pore eletricity is 80% generated using natural gas and not fuel oil. So why in the world did SP tied themselves down to a contract based on fuel oil prices? To said that this is market practice is not a good excuse. The Singapore government has never been afraid of taking the unconventional route to protect its rights and access to unavailable resources (like water) so why couldn't they do the same for natural gas? And in the future they are going to sell fuel plan like phone plan? How the hell do they expect us to measure such usage!

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