Mauritius: Unions Oppose Slew Of Privatisations

Mauritius has announced state divestments from a number of companies and organisations. The aim is to generate funds and hopefully provide better facilities to the population. But the reaction among the unions has been hostile.

Privatisation is not new to Mauritius. Eleven years ago, the government sold 40% of the assets of Mauritius Telecom (MT), a very successful state-owned enterprise, to France Telecom, in spite of protests from the trade unions and the workers.

At that time, it was made out that there was no choice for the government other than to undertake the transaction because of a lack of the “much-needed foreign exchange” to manage the island’s balance of payments.

Three years later, it transformed the Postal Services into Mauritius Post Ltd, through another form of privatisation called “corporatisation” whereby the new company is managed by the private sector with the aim of earning profits.

But some of the earlier privatisations have not gone down well with the unions. At Mauritius Telecom, the Telecommunications Workers Union (TWU) describes the deal as a “total failure and political fraud”, suggesting that France Telecom has not lived up to the promises made to the population.

“These 11 years have been very dark for Mauritius Telecom,” says TWU negotiator, Vishnu Jugdhurry. The union wants total control of the telecom operator by the government. Jugdhurry says there has been no technological development that MT could not have put in place without the help of its French strategic partner. The trade unionist believes that France Telecom has emerged as the big winner in the deal as 500 employees have left the company since 2000 and the quality of the services “has never been so bad”. Trade unions believe that France Telecom is using reserve funds from Mauritius Telecom to invest in two foreign countries.

At Mauritius Post Ltd, the quality has improved considerably with a whole range of new services offered to the population; they now go to the post offices not only to post letters but also to pay utility bills and transport licences, and collect social benefits. “It was a big challenge to convince the employees to join the new private entity because of the fear of job losses and also to reinvent, innovate and diversify the products and services offered to satisfy the public, says Giandev Moteea, CEO of Mauritius Post Ltd.

More deals in the pipeline

More recently, Finance Minister Xavier-Luc Duval said, “The world keeps changing and we must adapt,” when he announced the disinvestment of the state from several commercial enterprises that include casinos, tourist villages and retail outlets, amongst others.

He expects to add some MRupees4bn ($131m) to the state coffers. “This is not a clearance sale as the Minister wants to chalk out a very good deal from this transaction,” one official at the Finance Ministry believes, adding that the poor financial situation of these companies is of less importance compared to the substantial potential they have to earn profits under a different model of management.

The government has called for a specialised private financial institution to transform the Development Bank of Mauritius (DBM) into a micro, small and medium enterprise bank.

It also wants a strategic partner for the Albion Fisheries Research Centre and another for the Cargo Handling Corporation (CHC), whose operations would transform the island into a hub for the transhipment of goods in this part of the world.

The government’s plan is also to privatise the National Transport Corporation (NTC) because of its heavy losses and debts accumulated over the past years. However, this need not be a 100% private deal as the government wants to keep control over this enterprise. It is the most important method of public transport with its fleet of 525 buses. However, 70% of the routes served are not profitable. The NTC currently employs 2,500 people but needs about 1,500, according to the management. The company is losing around MR15m ($491,000) monthly.

The water, wastewater and health services are also being scrutinised for privatisation – sooner or later. In his budget proposals for 2012, Finance Minister Xavier-Luc Duval said that the water and wastewater sectors will be reformed with the help of Singaporean experts in a bid to improve delivery of services. The water sector in Mauritius suffers from a lack of investment and thus old pipes have not been replaced. This leads to a loss of huge amounts of water, as much as half of production, in the distribution network. “It is expected that substantial reforms and investment will follow in the water sector,” Duval added.

The long-standing free health service offered to the whole population, rich or poor, is also of concern to the government. As an introduction to a paid service, workers will be allowed to use their contributions to the National Savings Fund (NSF) as payment of private health insurance. They can now seek private medical care for themselves and their family as their contributions are converted into a medical insurance scheme.

This is a first step towards the privatisation of the health services that would help to reduce the heavy burden on the public health system. But Health Minister Lormus Bundhoo denies that the government’s intention is to privatise health services offered in public hospitals. “These services will remain free. People would be able to continue to use them if they do not want any medical insurance.” The minister added that the budget for health was increasing from MRs 5.3bn ($174,000) in 2009 to MRs 7bn ($229,000) in 2012.

Mixed reactions

Resistance to privatisation, despite the views of the telecoms union, is actually very muted. The public seems to be in favour of privatisation based on their experiences of the better private sector management of banks, the sugar industry and airport services, amongst others.

However, trade unions in the port sector are furious and they are mobilising people against the privatisation of the Cargo Handling Corporation (CHC). “Port workers firmly oppose a return of the private sector in the port area, be it local or foreign. Privatisation will be a setback for the country as well as the struggle of workers”, says Ashok Subron, spokesman for the Port Louis Maritime Employees Association (PLME).

He argues that  it is the contribution of the workers to the progress of this company that has made the port one of the best in the region. The shareholders of the CHC are the government with 6% shares, the State Investment Corporation (54%) and the Mauritius Ports Authority (40%.)