News
Expressways shifted from RDA to state-owned Sahasya
View(s):The Cabinet has granted approval for Sri Lanka’s expressways to be shifted from the Road Development Authority (RDA) to a state-owned company called Sahasya Investments Ltd (SIL) set up in October 2020.
The objective is to “operate the network in a more commercial manner”, documents seen by the Sunday Times state. The possibility of implementing a public-private partnership (PPP) through SIL to manage the expressways is also under consideration.
The average annual capital and recurrent grant provided to the RDA— a “non-commercial” State-owned enterprise (SOE)—in the last five years is a massive RS. 106bn, a Cabinet memorandum from the Ministry of Finance, Economic Stabilisation and National Policies reveals. In contrast, the yearly internal fund generation from the expressway network has been just around Rs. 7bn.
Except for this meagre income from expressways, the RDA depends almost entirely on the Government budget. Its component of debt guaranteed by the General Treasury is around Rs. 352bn (serviced through budgetary allocations).
The RDA’s non-current asset valuation (assets that cannot be quickly converted into cash or cash equivalents to pay for debts or short-term liabilities) was around Rs. 932bn at the end of last year. The RDA is one of the top SOEs identified for reform. The Cabinet has also proposed that the RDA should maintain and expand other road networks with budgetary support and improve its level of service to match the funds it receives.
The Cabinet has instructed the RDA to improve its finances and directed the Secretary to the Ministry of Transport and Highways to submit a plan within three months to enhance efficiency in the RDA’s use of budget and human resources, the documents show.
It is proposed to separate the expressway network, expressway lands, expressway local loans and staff from the RDA and assign them to SIL. It is recommended that the company’s Board will have Independent Directors with the “required expertise and industry knowledge”. SIL is also required to revalue its assets with current market prices to improve its balance sheet.
Meanwhile, the General Treasury will provide gap financing to SIL to repay loans obtained to build the expressways, until the company’s financial position is improved to a stage when it can meet such obligations.
Apart from exploring the possibility of a PPP, the company is expected to implement new strategies to make use of idle land. This includes using these properties to generate renewable energy.
The RDA is also expected to revalue its road network while making its business operations as well as financial and non-financial progress transparent, with regular financial statements. Any transfers from the Government to the RDA will be reflected in the national budget and such expenditure will be consistent with the fiscal targets under the IMF Extended Fund Facility.
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