State-Owned Enterprises’ losses double

Wednesday, 12 June 2019 00:00 - - {{hitsCtrl.values.hits}}

Finance Minister Mangala Samaraweera

16 SOEs reported net losses of Rs. 157 b last year, up from Rs. 87 b in 2017
37 SOEs recorded a net profit of Rs. 131 b, lower from Rs. 136 b
55 SOEs contribute to 13.3% of the GDP
Mangala calls to rethink maintaining
loss-making enterprises, including SriLankan Airlines
Treasury signs new Statement of Corporate Intent with 10 SOEs to improve performance

By Chathuri Dissanayake

Losses of State-Owned Enterprises (SOEs) doubled in 2018, prompting Finance Minister Mangala Samaraweera to stress the need to rethink continued Government support for those loss-making entities on Monday.

“The Government has been forced to spend money that could have been utilised for welfare and infrastructure development to maintain some of these loss-making institutions,” the Minister said, speaking at a Finance Ministry event held to sign Strategic Corporate Intent (SCI) with eight State-Owned Strategic Enterprises.

Out of 422 SOEs, 55 have been identified as strategic enterprises, of which 37 recorded a net profit in 2018 amounting to Rs. 131 billion, a drop in net profit of compared to Rs. 136 billion made by 39 SOEs in 2017, as recorded in the annual report of the Department of Public Enterprises. Another 16 SOEs reported net losses amounting to Rs. 157 billion, while in 2017 the loss recorded was Rs. 87 billion.

The 55 SOEs which have been identified as strategically important State Owned Business Enterprises (SOBEs) representing crucial sectors of the economy, include Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), and Sri Lanka Ports Authority (SLPA), the annual report of the Department of Public Enterprises noted.

However, SOEs in the country has a substantial correlation with the entire economy through providing essential services and public goods, with the key 55 SOEs contributing 13.3% of the GDB in 2018, Finance Ministry Secretary Dr. R. M. S. Samaratunga said.

“While some of these SOEs provide essential services to the country, there are corporations that are making huge losses, such as power, airlines, and cooperative areas, which have caused the Treasury serious losses,” Minister Samaraweera said.

“As a country, now we have to question if we can bear the losses made by SriLankan Airlines,” he pointed out.

The Minister also noted that the public holds a negative opinion of SOEs, questioning the policy to keep maintaining loss-making enterprises with public money.

Minister Samaraweera stressed that “no Government has the capacity to bear the kinds of losses” made by the SOEs, stressing the need for reforms to reduce losses to save public money and be efficient.

As part of the reforms, the SOEs have signed Statements of Corporate Intent in 2017. The first phase saw five SOEs (CPC, CEB, Water Board, Airport and Aviation Sri Lanka, and Sri Lanka Ports Authority) signing the SCI.

Another ten SOEs signed the SCI on Monday, namely: Sri Lanka State Plantation Corporation, Urban Development Authority, Lanka Sathosa Ltd., Central Engineering Consultancy Bureau, State Timber Corporation, Kurunegala Plantation Ltd., State Pharmaceuticals Corporation, Milco Ltd., National Livestock Development Board, and Geological Survey and Mines Bureau.

The SCI aims to enable the SOEs to be transparent, accountable, and performance-driven, Dr. Samaratunga said.