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COPE, PAC reveal a wretched state of affairs and total decline
The salary bill of some Rs. six billion for Mihin Board of Directors rose to Rs. 11 million, the Committee on Public Enterprises (COPE) revealed this week in its report. The two Parliamentary oversight committees, the Public Accounts Committee (PAC) and COPE presented their reports to Parliament this week. COPE examined the accounts of 244 State-run institutions, while the PAC examined the accounts of 69 Government institutions.
COPE head Dew Gunasekera (centre) with Karu Jayasuriya (left) and Mahinda Amaraweera (right) at a news conference. Pic by Athula Devapriya
It was pointed out in the COPE report that the remunieration of the Board of Directors which had been Rs 5.4 million had risen to Rs 11.2 million. The COPE report revealed that the biggest loss-making institutions were the Ceylon Electricity Board (CEB), SriLankan Airlines, Mihin Air and the Ceylon Petroleum Corporation (CPC). (See graphic for details of losses).
The CPC had been gradually incurring losses from 2008, with a loss of Rs 94,508 million in 2011. The CPC’s Chief Accounting Officer/Administration Officer (CAO/AO) has stated that 60% of the loss was due to the subsidised sale of fuel to the CEB, and the loss incurred up to 30.09.2012 had been Rs 77.7 billion, out of which Rs 41 billion had been due to the sale of fuel to the CEB.
With regard to Mihin Air, the Committee found that the loss incurred from April to September in 2012, had been Rs 700 million. It was stated that the cost of fuel had been 43% of the total cost and 60% of the total revenue, while Mihin Lanka owed nearly Rs 1.6 billion to the CPC for fuel purchases.
COPE also found that the remuneration of the Board of Directors which had been Rs 5.4 million in 2008 had increased to Rs 11,244,991 in 2011. The Committee also found that the financial position of SriLankan Airlines was extremely unfavorable.
The Committee also said it is highly concerned by the difference between the income and expenditure of the CEB continuously increasing due to the escalating generation cost, which would ultimately lead to a severe financial crisis. The CEB’s CAO/AO had said that the total loss of the CEB by end 2012 would be around Rs 65 billion.
It also said that the severe losses of the CEB, Mihin Lanka Ltd. etc. had been due to the under-selling of their services, and not passing the burden onto the General Public. “If this situation is not addressed promptly, institutions such as the CEB, CPC and Mihin Lanka Ltd. are on the verge of collapse as entities, which would in turn affect the country’s Banking sector.”
Meanwhile, the PAC probing the Inland Revenue Dept (IRD) on the action it had taken against officers connected with the VAT fraud case, as directed by the Committee, found that the Dept had not even charge-sheeted the officers responsible for the fraud. After the Committee pushed for action in this connection, it was informed that a three-man committee had been appointed to identify the responsible persons. However, the Committee had pointed out that there was no need for another committee, as the presidential committee probing the VAT fraud case, had already identified those responsible.
The PAC, in its report, highlighted the underutilisation of provisions allocated to various government depts and ministries as a serious problem, with one of the reasons attributed to this being the unrealistic projections when preparing annual estimates. “This situation should be considered seriously because, if there has been elastic estimates, the Treasury could have been able to make us of the money for a better purpose,” it said.The PAC also observed that a considerable number of foreign funded projects have fallen into the category of behind the schedule due to underutilisation of funds. “This is an alarming situation, as these fundingsss are closely monitored by donor agencies, and could adversely affect future funding negotiations,” the report said.
Meanwhile, in its recommendations, COPE stated the need for increasing existing salary scales of professionals in the Public sector, as professionals cannot be either recruited or retained with its existing salary scale. Therefore, it recommends the Treasury to take immediate action to raise the salaries and other remuneration of these posts, to avoid any possible collapse of the Public sector.
COPE also said that, in addition to the institutions coming under the purview of the Auditor General, there are institutions which are audited by external Audit firms nominated by the Treasury, on the approval of the Auditor General. However, the Committee observed that there is neither a proper mechanism nor criteria in selecting private auditors, which sometimes poses questions on the acceptability of the audited accounts, and recommended the formulation of a healthy system in appointing private auditors, securing effective accountability towards public money.
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