The new government plans to restructure loss making State Owned Enterprises (SOEs), including Mihin Lanka, to be self financed without depending on the General treasury.
At present Sri Lanka has around 245 public Corporations, institutions and the boards classified as SOEs of which 55 have been identified by the government as the strategically important enterprises which are engaged in commercial, industrial and financial activities.
Finance minister Ravi Karunanayake said that as part of the government’s plan to restructure these strategic SOEs, actions have been taken to make SriLankan Airlines, Mihin Lanka, Ceylon Petroleum Corporation and the Water Board to be self financed with the capital infusion by the general treasury .
Under this major restructuring programme the government will make a capital infusion of Rs 65 billion to the Water Board, Rs 100 billion to the Ceylon Petroleum Corp, US Dollar 125 million to SriLankan Airlines and US Dollar 25 million to Mihin Lanka in the year 2015 by way of Treasury bonds.
Many of the SOEs were making losses for the last several years. Commercial operations of energy, aviation and commuter transport and plantation clusters have ended up with losses. CPC has an accumulated debt of Rs 234 billion while CEB ‘s corresponding value of Rs 57 billion. Sri Lankan airlines debt is running at Rs 124 billion.
The new government has taken a policy decision that the institutions of economic and strategic importance should be independent in their own affairs because it is unfair for the general treasury to pump tax payers’ money to maintain those at loss making institutions.
The major setback identified in these institutions were operational inefficiency resulting in poor financial performance, Poor product quality and supply shortages, Inability to mobilize resources to meet large investments to expand capacity and improve quality and Excessive dependence on transfers or credit guarantees from the government causing a heavy burden on the budget.
Therefore, Mr Karunanayake said that the government’s Economic Sub Committee headed by the Prime Minister Ranil Wickremasinghe after having studied the importance of these major SOEs has approved the capital infusion to make them self financed within the next three years.
“These Institutions are strategically important to the economy and highly sensitive to the behavior of all its stake holders including the general public. So while the government maintains them as SOEs will make capital infusion to make them autonomy in their service providing “said the Minister Mr Karunanayake.