Govt.’s great expectations

Friday, 12 November 2010 23:46 - - {{hitsCtrl.values.hits}}

The Government’s ambitious plan to turnaround loss-making State Owned Enterprises (SOE) has become a multipronged one to offset delays and includes upgrading marginal profit-making companies as well. The request for proposals for six SOEs will be made at the end of this month for private investment.

By Uditha Jayasinghe

State Resources and Enterprise Development Ministry Secretary Dr. W. Gamage told Weekend FT that the President was yet to finalise the Board of Directors for the company formulated to covert 17 loss-making SOEs into profitable ones. The venture, which received Cabinet approval in August, was expected to be launched in two months.

The Ministry is also upgrading the efficiency of seven marginally profit-making companies, including the two coconut plantations, Paranthan Chemicals and phosphate mine.

Dr. Gamage stated that the aim was to return the entire Ministry allocation of Rs. 174 million to the Treasury. “Normally the profit is Rs. 300 million, which we hope to increase to 500 million this year and Rs. 900 million in 2011. It will eventually reach Rs. 2 billion,” he explained, adding that they had received positive response to commence Public-Private Partnerships (PPPs) for six SOEs.

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 company, which will be named ‘State Resources Management Corporation Limited,’ will be established under Act No. 7 of 2007, for the development of underutilised assets belonging to loss-making public enterprises, and Rs. 100 million will be transferred from the Treasury as initial capital for the company.

According to the Cabinet paper submitted for State Resources Management Corporation Limited, overall PEs in total possess assets amounting to around Rs. 800 billion.

Approximately 21,000 hectares of land owned by Kantale Sugar Factory, five hectares of the B.C.C Company in Colombo, Rubber Production and Export Development Company amd National Paper Corporation as well as over 35,600 hectares of underutilised land belonging to State Plantation Corporation and Janatha Estate Development Board will be vested under the new company.

The Government is also considering revamping the management of SOEs to include private sector experts and reduce the number of political appointments.

Dr. Gamage insisted that they would introduce human resource evaluators including Key Performance Indicators (KPIs) and reduce production costs. “For example in B.C.C. Lanka we have reduced production costs by 20%.”