SOEs burden

Losses by any other name are still losses. This would not escape Committee on Public Enterprises (COPE) Chairman Sunil Handunnetti who recounted losses of Rs. 110 billion at State Owned Enterprises (SOEs) in Parliament on Wednesday but referred to them as “wasteful and uneconomic” practices by SOEs.  

In its latest edition COPE focused on 15 establishments from 1 May till 31 August 2016. Among the worst offenders was former President Mahinda Rajapaksa’s pet project, the Suriyawewa Cricket Stadium, which has a payment of Rs. 5 billion pending but without an owner. 

The Cooperative Wholesale Establishment, Road Development Authority, Sri Lanka Insurance, State Engineering Corporation, Telecommunication Regulatory Commission, Sri Lanka Cricket, Sri Lanka Rupavahini Corporation, National Lotteries Board, Ceylon Electricity Board and Sustainable Energy Authority of Sri Lanka, Football Federation, Sri Lanka Ayurvedic Medicine Corporation, Maga Neguma institutions under the Road Development Authority, Sri Lanka Ports Authority, Kurunegala Plantations and Employee Trust Fund were the other State enterprises investigated in this report.

Certain projects which are not within the purview of the Road Development Authority have created massive losses, pointed out the JVP Parliamentarian, highlighting investment on Nelum Kuluna as a “total waste”. The Football Federation is also under the pump as it has received millions of euros in donations but has largely wasted them in questionable transactions. 

The State Engineering Corporation loss is Rs. 2,918 million, mostly exacerbated by the actions of ministers who refuse to repay the corporation from funds allocations to their respective portfolios despite work done and tries to shift responsibility to the Treasury. Despite two years of rule by the present Government, much of these oversights remain unaddressed and people responsible for these excesses under the previous administration have not been held responsible.     

Former COPE Chairman Minister D.E.W. Gunasekara went on record numerous times, warning monitoring of public finance is in a terrible state and Parliament has to take action on the reports that are released annually by the committee. Yet consecutive years have proven that such appeals are deftly ignored by the Government. Despite repeated appeals, neither the CID nor the Bribery Commission has seriously investigated and punished the numerous offenders citied in successive reports. 

Now that many of the loudest voices supporting COPE, including Deputy Foreign Minister Harsha de Silva and Deputy Minister Eran Wickramaratne, are actually members of the National Government, they have more responsibility than ever before to ensure the findings of COPE are acted upon and wrongdoers punished. 

In the 2015 COPE report alone, 16 out of 72 public companies were found to be loss-making. The responsibility for acting on the COPE report falls primarily on Parliament itself, which should, in particular, pay attention to the revelation made by COPE that 98% of the loss in public enterprises is by four State companies: The Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), national carrier SriLankan Airlines and Mihin Lanka. Economists have estimated that loss-making companies bleed as much as 2% of GDP from the economy.

Yet COPE has failed to question Budget allocations given to companies that are repeatedly making losses and establish a mechanism that makes top officials directly culpable for mismanagement of public finance. At the very least it should ensure that a performance-based pay structure is implemented for the Board of Directors and other top appointees. Parliament now has to prove itself as a watchdog and the Government has to make their pledges true.