Government to annul provincial health and utility corporations, centralise services

President Dr Mohamed Waheed Hassan’s Spokesperson Abbas Adil Riza said the government intends to annul 30 government companies, including the provincial health and utility companies, in order to streamline government policy and improve service delivery.

The seven provincial utility companies—charged with providing electricity, gas, water and sanitation services—will be annulled and brought under one central umbrella corporation.

Furthermore, the seven provincial health corporations will be dissolved and health services will now be provided through the Health Ministry and the Centre for Community Health.

Riza said the provincial companies had failed to deliver services and that ousted President Mohamed Nasheed’s administration had set up separate utility and health corporations in each of the seven provinces only to award salaries to Maldivian Democratic Party (MDP) activists.

Nasheed’s former Policy Undersecretary Aminath Shauna said the act represented a “move back to Gayoom’s policies”, and defeated the purpose of decentralisation. Maumoon Abdul Gayoom ruled the Maldives from 1978- 2008.

“Malldives’ geographical fragmentation means one central board or company will find it impossible to effectively monitor and deliver services in an equitable manner,” Shauna said.

“They want to re-establish a relationship of dependency between the islands and Malé. Their intent in this is to consolidate power. Islanders will once again have to come to Malé and beg for services,” she added.

Effective Service Delivery

Speaking to Minivan News, Shauna said Nasheed’s administration had pursued a policy of corporatisation at provincial level in order to decentralise and improve service delivery.

“We have already experienced the disadvantages of centralising services; it made service delivery slow and led to corruption. Corporations were instituted because utility companies were not run on a business model. Island electricity providers often came to the finance ministry asking for debt relief. We wanted to eliminate this dependency. Corporatisation also creates reliable services and creates economies of scale,” Shauna said.

In response Abbas said the provincial companies had failed to deliver services.

“These companies could not manage their capital. In 2010 alone, Rf 800 million (US$52 million) was spent on supporting the salaries of so-called corporations,” Abbas said. The companies did not share common polices and operated on very different models, he claimed.

Although the provincial companies will be terminated, the operational units at province and island levels would continue to exist.

“This is centralised coordination to streamline policy. The operational units at provincial and island levels will continue to exist and the staff will retain their jobs,” he said.

“What we are doing is eliminating political boards. There were 30 separate boards before. Some boards had as many as 15 board members, and they were all political appointees. The former government did this in order to grant party activists salaries,” he alleged.

“When you eliminate political boards, service delivery will in fact be faster. If you look at the health records, we are slipping back and we believe this happened because service delivery was not efficient or effective,” he claimed.

However, Shauna said Nasheed’s “ultimate aim was to make these companies public companies and fully independent. They were state sponsored until they could find their own feet.”

Some companies had been more successful than others, Shauna admitted. For instance, the Southern Utilities Ltd – serving Addu and Fuamulah Atolls – had contracted Biwater International Ltd in 2010 to build six seawater reverse osmosis desalination plants to provide potable water. The contract is valued at US$42 million. The Southern Utilties Ltd had also handled all roadwork and landscaping for the 2011 SAARC Summit held in Addu atoll.

“All of the companies were improving gradually. They were finding their own feet, and contracting partners through public private partnerships. Our vision was for the government to step out of service delivery and play a monitoring role,” Shauna said.


A second benefit of the centralisation of utility and health services is that the policy would empower local councils, Riza told Minivan News.

“Decentralisation means administrative decentralisation through elected councils. It does not mean making corporations. Now the ministry will be working very closely with the councils, where tasks will be delegated to councils, whereas corporations can and did override councils before,” Riza said.

In response Shauna said the spirit of decentralisation was to decentralise service delivery and to promote greater accountability.

“When you have regional companies, you have service providers working closely with the public. These companies will have to face the public everyday and this improves accountability,” Shauna said.

“How can a central authority with a limited number of people provide equitable services to the entire country? A few people deciding for the entire country does not help the people,” Shauna said.