Sri Lanka privatisation deals may need to be revisited
ECONOMYNEXT – Sri Lanka’s privatisation agreements and public listing have brought greater efficiency and transparency but some agreements have left room for old problems to crop up, officials and analysts said.
Thilan Wijesinghe, head of Sri Lanka Public Private Partnership agency, said the leasing of terminals to private operators had brought greater efficiency and is now bringing most of the profits of Sri Lanka Ports Authority, the state agency that owns Colombo Port.
A recent parliamentary committee showed that Sri Lanka Telecom (SLT), which was listed in the stock market and a large stake, a little short of a majority was sold to a foreign firm had again become inefficient and overstaffed.
Wijesinghe said he was himself involved in a committee that oversaw the listing of Sri Lanka Telecom in the 1990s.
"If there are flaws in agreements, they have to be re-negotiated," he told a forum on state-owned enterprises in Colombo at the Asia Liberty Forum co-hosted by Advocata Institute, a Colombo-based think tank.
He said the Telecom privatisation and competition had brought many benefits, but it also showed that simply listing firms may not always bring the desired results.
Management of Sri Lanka Telecom was given to Japan’s NTT, who then sold out to a Malaysian firm. But state interference had continued at SLT.
Ravi Ratnasabathy, a fellow at Advocata Institute, said public listing brought greater transparency to state agencies, which were milked by politicians in the name of the public.
But the public had no control over the actions of the politicians though their money was used to fill the losses of state owned enterprises.
Critics have pointed out that political henchmen were appointed to key posts and boards and also appointed as ‘consultants’ at high salaries to drain cash into the hand of the ‘boys’.
In the 1990s, Sri Lanka also brought in Emirates as managing shareholder to SriLankan Airlines, but it was ousted in 2008 by the then-administration, resulting in a string of losses and corruption charges.
Due to concerns over giving up full control to the private buyers, the privatisations were done with majority control left in the state.
In contrast, countries like Vietnam had seen major successes in state banks with minority stakes sold to foreign banks along with public listings. (Colombo/Mar04/2019-SB)