Reply to “SOE losses costing Rs. 141,809 per Sri Lankan household”

By S.P.U.S. Wickramasinghe 

This comment is on the article “SOE losses costing Rs. 141,809 per Sri Lankan household” by the Advocata Institute in the Daily FT of 5 April 2024.

“The soft pedalling by the Government to carry out crucial reforms of State Owned Enterprises is forcing taxpayer’s wallets to take the brunt of the hit, Advocata Institute said yesterday.

Its CEO Dhananath Fernando (DF) said this taking into account the upcoming election cycle, the Advocata Institute, urged the need to reform State Owned (SOE) Enterprises. Here it was said that irrespective of the Government that comes into power, SOE reforms must continue.”

How true Mr Fernando, what you are suggesting is that the SOEs must either terminate their activity or else sell them to some private individual.

Mr DF, to date, 149 SOEs had been sold, of which only a handful is functioning. DCSL being one of them. What happened to the others? What happened to the Fixed Deposits some of the SOEs had. One SOE is reported to have had FDs to the tune of Rs. 600,000,000,000. What happened to that FD? When the sale price was agreed did the Government include the value of the FD in the sales price? What did the Secretary to the Treasury do with that FD? 

Another SOE had a stock of highly saleable products. I was told that when the highly saleable product was sold, the new owner created chaos within the institution and when the workers reacted the institution was closed down. What did the Finance Secretary do when that happened? The Finance Secretary should have put his foot down, it was not a part of his dowry that was destroyed. 

This SOE had 100s of vehicles used by the staff, over 100 tractors + lorries. What happened to those? 

No Mr DF the fault is not with the SOEs but with the Head of Government, be it the Prime Minister or President. It is they who got the people’s vote, not the Ministers. They are primarily responsible.

Daily FT publishes information with regard to the changes at the top of the public companies. The paper also publishes a short biography of the appointees. How many of the Directors appointed to the SOEs can match those in the private sector. There was a director who ran a tailor shop at Maradana, another who was a Karawadu Mudalali, another a well-known solicitor for women’s services. 

There was one Director perpetually after liquor, his language was unique, I was exposed to such language in my earlier years – arguments between women, not even those women could match this director. He had taken over one of the SOE’s vehicles and that vehicle, the driver and this director was on the move nearly 24hrs/day. 

In the private sector, depending on your performance one could wish to go up the ladder even to the Board. How many employees of the SOE had reached the Board? Only two, one at the CTB and the other at the Paper Corporation; however with the change of the Government both were sent home.

I must also comment on the Consultant Rehana Thowfeek (RT). Ms Thowfeek, the primary corrective measure is to ensure that the Board of the SOEs is constituted with people able to deliver. Not with security guards, karawala mudalalis, tailor shop owners or even solicitor for women’s services. 

That is one side of the story, the other side is what can be done to meet the financial burden. 

No Ms Thowfeek the solution lies elsewhere.

30%+ of our imports is fuel-oil and coal. The coal is used to generate power. Both can be met locally, with locally available raw materials. Produce Butyl alcohol as China has done. China is said to target a production of 100,000,000,000 tons of butyl alcohol in the near future. In the production of Butyl alcohol Hydrogen is a by-product. Hydrogen can be used to run vehicles through a technology called Fuel Cells and also generate electricity. China holds 10% of the world’s fuel cell market.

If Butyl alcohol is to be produced locally at least 2-3 million jobs will be created.

Come on Mr DF and Ms RT think positively. Get the connected people move – the universities, the Sugar Research Institute and also the UGC.

There is a belief that a foreign party can run these SOEs successfully. Do not be hoodwinked Mr DF and Ms RT. I worked at an FDI where a so-called new technology was instituted. That technology went against what I studied at the GCE (OL). The factory had to wind up its activity in four years.

(The writer can be reached via [email protected].)