The government this week ‘fast-tracked’ the take-over of 37 private assets through controversial laws but has been struggling for more than four years to restructure 23 loss-making state ventures.
Some of these enterprises were not operating for around four to seven years while others have been defunct for over seven years.
In 2010, the government set up a separate State Resources and Enterprise Development Ministry to restructure these state ventures by handing it over to prospective investors.
Earlier these enterprises operated under various ministries. So far the Ministry has only finalized one agreement with an investor to revamp the Embilipitiya Paper Corporation coming under the National Paper Company Ltd. A senior Ministry officialsaid this would be handed over to an Australian company, M/s Perth Engineering and Maintenance Private Ltd for Rs. 600 million. It has called Expression of Interests (EOIs) from interested parties to take over Rubber Manufacturing and Export Corporation (RMEC), Kantale Sugar Industries Ltd and Ceylon Ceramic Corporation, he revealed. The ministry is yet to start the evaluation and restructuring process of other 19 state enterprises, he added.
The 23 institutions
Lanka Mineral Sands; Lanka Phosphate Ltd; Paranthan Chemical Co Ltd; Lanka Handicrafts Board; JEDB; SLSPC; Elkaduwa Plantations Co Ltd; BCC Lanka Ltd; Sri Lanka Cement Corporation; Lanka Cement Ltd; SL Rubber Manufacturing & Export Corporation; Higuana Suger Industries Ltd; Kanthale Suger Co; Ceylon Ceramics Corporation; National Paper Co Ltd; Lanka Salusala Ltd; Lanka Fabrics Ltd; Statcon Rubber Co Ltd; Lanka Sack Makers Ltd; Vanni Tiles Ltd; Dept. of Small Industries; Werahara Engineering Services Co and Kahagolla Engineering Services Co. |
The government will lease out these four loss-making enterprises on a 30-year term under a redevelop and revive plan, the official said. Only the immovable and movable assets of the failed ventures will be leased out while full ownership will remainwith the government, he added. The Treasury is to soon fund the payment of around Rs. 493 million as compensation to an estimated 822 employees attached to four defunct state entities that are to be leased out, Finance Ministry sources said.
According to Finance Ministry sources, the leasing out of these ventures including the Ceramic Corporation, RMEC, Kantale Sugar and the Embilipitiya Mill with assets valued at over Rs.10 billion is only the beginning of this initiative. The Treasury doles out Rs. 14.3 million per month to pay salaries of workers of the Ceramics Corporation, Kantale Sugar and the Embilipitiya Mill. The RMEC is now defunct, the sources disclosed.
Earlier the government has made an attempt to resume production at Embilipitiya Paper Mill but failed miserably, Opposition leader of the Thanamalwila Pradeshiya Sabha , K. Sumithapala told the Business Times.
He noted that Economic Development Minister Basil Rajapaksa re-commissioned the paper factory in September 2008 after six years but it was closed down again in the latter part of 2010 pushing the employees into difficulty. “The same thing will happen to Sevanagala Sugar Factory located in close proximity to this paper mill after its take over by the government,” he added.
In 2009 President Mahinda Rajapaksa as the Minister of Nation Building and Estate Infrastructure Development obtained cabinet approval for the procurement of an interest free loan of Rs. 50 million from the Treasury to increase production in paper mills at Valachchena and Embilipitiya. Accordingly the approval of the Cabinet of Ministers was granted to provide time till December 2009 to restructure the two mills and to direct the Board of Investment to expedite the selection of a potential investor paving way for restructuring of the two paper mills.
It took two years to find an investor for Embilipitiya Paper Mill and therefore finding investors for 22 other loss making state ventures will be a herculean task, industry analysts say. On top of it the government will have to find investors for 37 more institutions and no one can say how long it will take to complete the procedure, they pointed out.
A company called State Resources Management Corporation Limited was set up by the ministry to handle underperforming state enterprises. This company has been registered with the Registrar of Companies recently but is still not functioning. It is mandated to guide public ventures by formulating new policies for development of properties that are not being utilized presently but having a potential to be commercially developed. This company will provide land and assets not in use at present on lease for a period not exceeding 30 years. The Treasury made a provision of Rs. 100 million as the initial capital of the institution. |
E-mail
