ECONOMYNEXT – Sri Lanka’s LTL Holdings, a 63 percent owned unit of state-run Ceylon Electricity Board could be listed to end a stalemate with a parliamentary oversight committee and provide a return to the state for its share, it has been suggested.
Sri Lanka parliament’s Committee on Public Enterprises headed by Sunil Handunetti, a legislator from the Marxist Janatha Vimukthi Peramuna, backed by legal interpretations has been trying to gain oversight of LTL Holdings.
“The practical situation is that this company has been operating as separate unit for a long time,” former State Minister for Power Ajith Perera observed.
“There is a culture of independent operations there. We have to find a win-win model to spin this company off and also allow the government to get is share.”
Chairman of CEB Rakhita Jayawardene said there have been discussions about the possibility of listing the company in the stock market, following a recommendation from a cabinet subcommittee, but no final decision has been taken.
A listing would allow the CEB to get cash valuation for the growth of the LTL Holdings under its private minority shareholders.
LTL Holding was originally set up as a transformer making joint venture with a Scottish power company, which was later taken over by the multinational power group ABB.
When ABB sold out, senior managers of the firm bought out the foreign firm through a management buyout.
The firm then won a competitive bid to set up a thermal power plant for the CEB. The group later built power plants in Africa, Nepal and Bangladesh.
“This company has foreign operations now,” Perera said. “Sometimes it has trouble bidding for projects because of the state connection. So it is better to find a way to operate it independently. This battle has continued for many years without any solution.”
Handunetti claimed LTL Holdings was making profits out of CEB losses.
Perera however said LTL had other operations outside of CEB, though at one time most of its revenues did come from the state utility.
Most IPPs awarded to LTL had been on competitive bidding, analysts say, though there is a controversy over a 270MW combined cycle plant which was connected without a guaranteed heat rate.
Handunetti said the government has to take a policy decision to sell down the shares. Until then, he said COPE had oversight and wanted the auditor general to audit the LTL Holdings. (Colombo/Oct22/2019)