SOEs turn financial losses to profits
View(s):Sri Lanka’s state-owned enterprises (SOEs) have turned financial losses into profits within the first four months of this year amidst the delay in the restructuring of selected entities.
President Ranil Wickremesinghe’s administration has not restructured any SOEs in the past two years despite calling for bids and shortlisting local and international companies
However, restructuring efforts for at least seven entities have faced delays over the past eight months due to the government’s focus on transparency, maximising value, protecting employee rights, and improving service quality, State Minister of Finance Ranjith Siyambalapitiya disclosed.
According to finance ministry data, key SOEs turned a total loss of Rs.743 billion in 2022 to a profit of Rs. 456 billion in 2023.
Analysts’ note these profits were achieved after the government absorbed large debts from Ceylon Petroleum Corporation and SriLankan Airlines.
In early 2024, the SOEs sector showed strong performance due to rupee appreciation and reforms, including cost-reflective electricity tariffs and a fuel price formula.
Key SOEs recorded a profit of Rs. 185.9 billion in the first four months of 2024, compared to Rs. 144 billion in the same period of 2023, the finance ministry fiscal performance report divulged.
The collection of levies and dividends from SOEs increased to Rs. 13.2 billion in the first four months of 2024, compared to Rs. 9.6 billion in the same period of 2023
While bids have been solicited for various SOEs and some have been shortlisted, the process has faced challenges, including bidder withdrawals. Deloitte India is advising the government on these transactions.
In April 2024, the Cabinet approved reforms for State-Owned Banks (SOBs) to improve governance and risk management. This includes increasing the number of directors, ensuring a majority of independent directors, and establishing a specialised oversight unit.
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