Sri Lanka state enterprises lose Rs87bn in 2017
ECONOMYNEXT – Sri Lanka’s 55 largest state-owned enterprises have lost 87 billion rupees in 2017, with energy enterprises again making big losses without a price formula, while big state banks whose governance was strengthened in the late 1990s were making profits.
The losses came from 16 SOEs, the Department of Public Enterprises of the finance ministry said.
There were 400 agencies classified as SOEs, of which 264 were monitored by the DPE, and 136 classified as non-commercial came under the Department of National Budget.
The 55 large SOEs had a total turnover of 1,755 billion rupees equal to about 13 percent of Gross Domestic Product, of which 39 showed a profit of 136 billion rupees. Assets were equal to about 56.8 percent of GPD.
The return on assets (ROA) were only 0.64 percent which the PED said was a "rough indication" of their weak performance.
"The reasons for such performance ranges from lack of good governance practices including lack of a clear accountability mechanism, policy and legal framework to a weak supervisory role being played by institutions," the report said.
"Given the importance of the SOE’s, specially the SOBEs to the economy, the government’s strategy is to encourage and facilitate the SOBEs to be self-sufficient through improved corporate practices, management reforms, innovative financing, strong and prudent financial management, exposure to competitiveness and international best-practices."
Ceylon Electricity Board lost 49.2 billion rupees, and SriLankan Airlines lost 28.9 billion rupees.
Bank of Ceylon made a profit of 30.3 billion rupees, People’s Bank 23.56 billion rupees and National Savings Bank 13.04 billion rupees.
Bank of Ceylon and People’s Bank were reformed in the late 1990s by a reform agency headed by Mano Tittawella, strengthening their governance and loan approval process after being bailed out twice by tax payers over losses from directed lending to SOEs and politically connected borrowers.
Among the largest 55 agencies net profits exceeding losses were reported as 48.2 billion rupees.
But 19.5 billion rupees of ‘profits’ came from the Employees Trust Fund board, which is a pension fund of private sector workers and not a state commercial enterprise.
Sri Lanka Transport Board, a heavily unionized bus service which engages in periodic procurement of buses was listed as making 2.5 billion rupees in profits, though it had also received an 11.2 billion rupee Treasury subsidy.
Taxpayers had contributed 41 billion rupees to re-structure and invest in SOE expansion in 2017.
Among losses were 143 million rupees reported by Sri Jayewardene Hospital, a cost recovery hospital, which is expected to reduce the burden on tax payers and is not a commercial enterprises. (Colombo/June13/2018)