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Advocata calculates 55 SOEs have lost a cumulative Rs. 1.2 trillion from 2006-2020
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”.
Govt. MPs make contradictory statements on state of economy
By Shamindra Ferdinando
UNP National List MP Wajira Abeywardena on Sunday (26) disclosed the issuance of a circular by the Finance Ministry to restore overtime and other payments in the public sector.
The declaration was made in Galle soon after Transport and Media Minister Bandula Gunawardane lamented that the government was short of billions of rupees to pay public sector salaries, pensions, Samurdhi payments and meet recurrent expenditure.
Minister Gunawardena and UNP National List MP Abeywardena addressed the local media after the handing over of several buses to the Galle SLTB depot.
Cabinet Spokesman Gunawardena said that the government needed as much as Rs 196 bn before the Sinhala and Tamil New Year and its projected revenue was Rs 173 bn. In addition to that Rs 500 mn was required to settle what Minister Gunawardena called bilateral debt.
Minister Gunawardane said that a part of the first tranche of USD 333 mn from the International Monetary Fund (IMF) would be utilised to pay public sector salaries.
Of the USD 333 mn received so far, USD 121 had been used to pay the first installment of USD 1 bn credit line secured from India early last year, according to State Finance Minister Ranjith Siyambalapitiya.
Power and Energy Minister Kanchana Wijesekera in the second week of August last year revealed as much as Rs 3 bn had been paid as overtime to Ceylon Petroleum Corporation (CPC) workers for several months. This disclosure was made in response to a query raised by Chief Opposition Whip Lakshman Kiriella.
One of the major demands of the public sector trade unions on the warpath over the Wickremesinghe-Rajapaksa government’s new tax formula is the restoration of overtime.
Prof. G. L. Peiris yesterday (27) urged Speaker Mahinda Yapa Abeywardena to act speedily on the main Opposition Samagi Jana Balawegaya (SJB) request to summon Finance Secretary Mahinda Siriwardena before the parliamentary Committee on Ethics and Privileges.
Addressing the media on behalf of the Freedom People’s Alliance, the former External Affairs Minister said that the Treasury Secretary had challenged the parliament by withholding funds allocated in the budget 2023 to the Election Commission thereby sabotaging the election.
Prof. Peiris said that there couldn’t be a far worse violation of parliamentary privileges than a government official undermining Parliament.
Instead of appreciating the intervention made by the Supreme Court to facilitate the delayed Local Government polls, the ruling party had sought to challenge the apex court, Prof. Peiris said, urging Speaker Mahinda Yapa Abeywardena to fulfill his obligations.
Prof. Pieris said that if the government lacked funds, just one percent of USS 333 mn received from the International Monetary Fund (IMF) was sufficient to conduct the election.
The ex-minister said that the IMF wouldn’t oppose the utilisation of a fraction of the first tranche of USD 2.9 bn loan facility provided over a period of four years to guarantee the constitutional rights of the Sri Lankan electorate. (SF)
By Rathindra Kuruwita
Minister of Power and Energy Kanchana Wijesekera announced yesterday that the Cabinet of Ministers has granted approval for allowing China’s Sinopec, Australia’s United Petroleum and RM Parks of the USA, in collaboration with multinational Oil and Gas Company – Shell plc, to enter the fuel retail market in Sri Lanka.
The minister said that each of the three companies would be given 150 dealer operated fuel stations, which are currently operated by Ceylon Petroleum Corporation (CPC). A further 50 fuel stations at new locations will be established by each selected company, he said.
They will be granted licences to operate for 20 years to import, store, distribute and sell petroleum products in Sri Lanka, the minister tweeted.
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