Govt. pumps Rs. 185 b to make four key public enterprises self-financed

Wednesday, 12 August 2015 00:00 - - {{hitsCtrl.values.hits}}

The new Government’s plan to restructure the loss-making State Owned Enterprises (SOEs) to be self-financed without depending on the general Treasury will be a reality soon said Minister of Finance Ravi Karunanayake.

At present Sri Lanka has around 245 public corporations, institutions and boards classified as SOEs of which 55 have been identified by the Government as strategically important enterprises that are engaged in commercial, industrial and financial activities.

Minister Karunanayake said that as part of the Government’s plan to restructure these strategic SOEs, actions had been taken to make SriLankan Airlines, Mihin Lanka, the Ceylon Petroleum Corporation and the Water Board self-financed entities with capital infusion from the general Treasury.

Under this major restructuring program, the Government will make a capital infusion of Rs. 65 billion to the Water Board, Rs. 100 billion to the Ceylon Petroleum Corporation, $ 125 million to SriLankan and $ 25 million to Mihin Lanka in 2015 by way of Treasury bonds.

Many of the SOEs were making losses for the last several years. Commercial operations of energy, aviation and commuter transport and plantation clusters have ended up with losses. The CPC has an accumulated debt of Rs. 234 billion while the CEB has a corresponding value of Rs. 57 billion. SriLankan Airlines’ debt is running at Rs. 124 billion.

The new Government has taken a policy decision that the institutions of economic and strategic importance should be independent in their own affairs because it is unfair for the general Treasury to pump taxpayers’ money into maintaining loss-making institutions.

The major setback identified in these institutions were operational inefficiency, resulting in poor financial performance, poor product quality and supply shortages, inability to mobilise resources to meet large investments to expand capacity and improve quality and excessive dependence on transfers or credit guarantees from the Government causing a heavy burden on the budget.

Therefore, Karunanayake said that the Government’s Economic Subcommittee, headed by Prime Minister Ranil Wickremesinghe , after having studied the importance of these major SOEs has approved the capital infusion to make them self-financed within the next three years.

“These institutions are strategically important to the economy and highly sensitive to the behavior of all its stakeholders including the general public. So while the Government maintains them as SOEs, it will make capital infusion to make them autonomous in their service provision,” said Minister Karunanayake.