Govt. to ink corporate intent agreements with five SOEs today

With the aim of addressing concerns raised by the International Monetary Fund (IMF) on enhancing oversight and financial discipline of State Owned Business Enterprises (SOBE), the Government is scheduled to sign the first Statement of Corporate Intent (SCI) with five Government entities today.

Aimed at improving efficiency, five SOBEs - the Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), National Water Supply and Drainage Board (NWS & DB), Airport and Aviation Services (SL) Ltd. (AASL) and the Sri Lanka Ports Authority (SLPA) - will sign SCIs in the first round. 

“We hope this would be a changing point in these organisations. These organisations have the biggest impact on the GDP of the country,” Department of Public Enterprises Director General K.D.N. Ranjith Asoka said.

The department hopes that the SCI will contribute positively to the strategically important SOBEs to achieve the country’s economic goals by enhancing the contribution made to its GDP.

The move is expected to encourage and facilitate these SOBEs to improve operational and financial efficiency through improved corporate practices, innovative financing, strong and prudent financial management, exposure to competitiveness and international best practices and effective human resource management while enhancing public accountability, a statement released by the Public Enterprises Department said.

SCI is a tripartite Memorandum of Understanding (MOU) to be signed by the Secretary to the Ministry of Finance, Secretary of the relevant line ministry and the Chairman on behalf of the Board of Directors of the respective SOBEs. The effectiveness of the SCI process will depend fundamentally on to what extent the SCI will be used by the selected SOBEs and line ministries as their own management tool.

“We hope to carry out quarterly monitoring exercises to ensure that the program is effective. The six-month review will be done thoroughly. Right now we are developing the guidelines to carry out the monitoring,” Asoka said.

SCI includes key performance indicators linked to the corporate plan, action plan and annual budget of the SOBEs for three years’ time starting from 2017. In addition, the impact of all non-commercial operations by the SOBEs are also taken into account and included to SCI.

The CEB has identified its KPIs as improving the quality of electricity to customers by continuously reducing System Average Interruption Duration Indicators (SAIDI), reducing the System Average Interruptions Frequency Index (SAIFI), increasing electricity generation from renewable resources thereby increasing the Non-Conventional Renewable Energy (NCRE) generation composition by the end of 2019.

The CPC has identified its KPIs as improving refinery efficiency (output) as a percentage of capacity, ensuring financial viability by reducing debt to assets and improving productivity and management efficiency through institutional structural changes.

The NWS & DB has identified its KPIs as increasing new water connections annually, reducing non-revenue water percentage, increasing more access to safe drinking water, enhancing the efficiency of employees and improving operational efficiency and thereby reducing leak repairs cost per kilometre per month.

The KPIs of AASL are to improve infrastructure facilities to cater to handling 15 million passengers, achieving transshipment cargo out of total aviation cargo and improving the regional ranking of airport performance in terms of air traffic statistics and improving the number of aircraft movements at Sri Lankan airports.

The KPIs of SLPA have been identified as reducing the Average Ship Turnaround Time (Hour), maintaining the Average Waiting Time of Container Ships (Hour) and improving Gross Container Productivity per crane (Moves/Hour).

On the success of the implementation of this priority program, the Government is expecting to extend this move to other State Owned Enterprises (SOEs) as well from time to time. 

Altogether, there are more than 350 SOEs those can be identified as corporations, banks, academic institutions, statutory boards and public companies, etc. 

The Department of Public Enterprises is in the process of analysing the results of these institutions in order to chart its future path towards success.

Overall, the SCI provides a more transparent and accountable information stream to the real stakeholders i.e. customers, employees, regulatory authorities, Government agencies, the general public and any other interested parties.