Pakistani private sector urged to invest in Lanka SOEs

By Uditha Jayasinghe

PAKISTAN might become an investor in Sri Lankan State Owned Enterprises (SOEs) with the BOI considering promoting Private Public Partnership (PPPs) between the two countries.     

Saleem H. Mandviwalla

Pakistan Board of Investment (BOI) President Saleem H. Mandviwalla remarked at a Pakistan- Sri Lanka Business Forum on Monday that the country would consider encouraging their private sector to invest with the Sri Lankan government on PPPs if the incentives are right.

“We have been briefed extensively about the opportunities that are available in Sri Lankan SOEs and we will request interested parties to enter into discussions here,” he noted at the seminar acknowledging a question raised by the audience. “It is certainly a good opportunity,” he acknowledged.

Cabinet approval was given last month to seek local and foreign investors to present their Expressions of Interest (EOI) to revive the Embilipitiya paper mill, the Kantale sugar factory and the Ceylon Ceramic Corporation.

 This would be done under PPPs as part of the government’s programme to revive loss making state owned enterprises. Ceylon Ceramics Corporation, National Paper Company, Kantale Sugar Industries, Higurana Sugar Industries, Sri Lanka Rubber Manufacturing and Exporting Corporation, B.C.C. Lanka, Lanka Salusala and Lanka Fabrics are the other companies being considered for private investment by the government.  The Cabinet paper submitted by the official committee appointed to study loss making state owned enterprises sought approval to call for EOI, direct the Treasury for funds to pay salaries of Kantale Sugar factory employees from August 2010 until handing over of company assets to the investor. Services of temporary employees will also be terminated immediately.

A Project Steering Committee with the Chairmanship of the State Resources Enterprise Development Ministry Secretary will be appointed to formulate an action plan to monitor and facilitate till the completion of the handing over of the mill and start operations with the private investor.  Following deliberations it was revealed that the Kantale sugar factory has liabilities amounting to Rs.65 million. The recommendations mainly include revitalisation of Kantale Sugar Industries following correct procurement procedures. Main option recommended is to revitalise the industry as a Public Private Partnership (PPP) with 51% public and 49% private shares.

“It is also proposed that if the equity capital could not meet the required capital for investment the proposed State Resources Management Company to intervene and go for a share issue. The other option is to implement the PPP proposal with Build, Operate and Transfer (BOT) model with a foreign investor. The other options suggested are to lease out the factory and lands to an investor or to offer the lands to a joint venture with a private investor for other purpose. The other recommendations are to enrol the present employees to the new company or to terminate their services and pay the salaries to the existing staff of the Kantale factory until it is handed over to the new investor,” the Cabinet paper noted.