As many as 55 State Owned Enterprises (SOEs) have suffered a staggering Rs. 1.2 trillion cumulative losses from 2006-2020, says Colombo-based independent policy think tank Advocata.

The combined loss per day of the Ceylon Petroleum Corporation, Ceylon Electricity Board, SriLankan Airlines, Sathosa and the National Water Supply and Drainage Board is about LKR 384,479,189, according to data  for the year 2019, said Prof. Rohan Samarajiva, a veteran  policy expert  and an adviser of the Advocata Institute addressing a press briefing organized to highlight the urgency of carrying out  reforms in SOEs.

“The basic issue is that we, in this country, are suffering from a twin deficit. We need to  get started on addressing the core problem. Big, ponderous, government enterprises are not responsive to our needs. And because they’re not responsive, you will go home today and you will have a blackout of one hour, because they’re load shedding during peak hours,” said Samarajiva.

According to him privatizing a globally visible, yet loss making SOE’s such as SriLankan  Airlines is the best solution to create confidence among investors that Sri Lanka is serious about reforms.

Sri Lanka’s SOE are a serious burden on public finances. With the economic crisis reaching a tipping point, it is becoming increasingly impossible to keep these  loss making enterprises  afloat. Continuing to do so at the expense of the taxpayer can have serious consequences to the economic trajectory of the nation, Samarajiva said.

The massive loses have been incurred in a backdrop of the country wading through a serious debt crisis with questions  surrounding our ability to meet  forthcoming debt obligations.

The briefing brought together a panel of industry experts who  rang alarm bells on why Sri Lanka cannot afford to be complacent about State Owned Enterprise reforms anymore.

Prof. Samarajiva, explained the  seriousness of this issue along with how privatization can achieve positive outcomes for the country.

“In 1997, Sri Lanka Telecom was making losses and providing bad services. Today, after  privatization, it is  providing us with good services and employment at rates double what employees were earning (under the previous state-owned dispensation). It is also providing the government with a dividend which  generated billions to the government”.

He highlighted that the country has no other alternative  to prevent the hemorrhaging losses of SOEs apart from privatization.

“Privatization is not  a one size fits all model,  it is different in different countries and sectors – as seen in the telecommunication industry in Sri Lanka – with a good regulator we can have competition, leading to greater  efficiency and making technology accessible to the common public,” commented  Ms. Anarkali Moonesinghe, Advisor to the Advocata Institute.

She further elaborated that  possible avenues for privatization  that can be considered include  listing of SOEs on the  stock exchange. According to Moonesinghe, “our stock market could use large capital companies that are owned by the government today. It not only gives people ownership but also  broadens ownership by giving the average person an opportunity to become a direct stakeholder of these enterprises. This can be a better option than attaching the person through taxpayer money or having your EPF/ETF being invested in these enterprises”.