Failed SOEs account to Rs. 1.5 Tn accumulated losses

The failures of State Owned Enterprises (SOE) are creating a huge financial burden to the country; their losses have resulted in a staggering Rs. 1.5 trillion accumulated losses from 2006 to 2021.

In addition debt owed by public corporations up to 2021 was Rs 1.8 trillion which is a 9.4% of public debt, said Research Analyst Advocata Institute Rehana Thohwfeek at a special event yesterday on SOE’s. She explained that the country expected to generate around Rs. 100 billion from PAYE Tax and if one compares the losses of SOE’s and their debt it paints a very sad story.

She also said by providing subsidies by State institutions like Petroleum Corporations for Kerosene due to political and union pressures the CPA lost rupees billions.

Though SOE’s are marketed as national assets they are actually a vehicle for corruption,” accused Chief Executive Officer of Advocata, Dhananath Fernando.

In the wake of Sri Lanka’s economic challenges, it is undeniable that SOEs have had a substantial impact on the country’s fiscal health.

“They squander resources, land, labour, and adds to the debt burden. They monopolize markets limiting competitiveness and contribute to the inefficiency in the economy. At this economic juncture, the necessity for SOE reforms is not just a matter of economic prudence; it is a matter of national importance.

“Without swift and comprehensive SOE reforms/ privatization, we will face a far bigger unsolvable economic crisis never faced in the history of Sri Lanka,” he warned. Hence the time is now right to close some of them and privatize the remaining ones leaving a few key SOE’s that are needed by the government.”

Prof. Rohan Samarajeeva, Advisor Advocata recalled that clear cut policies and price should be tagged on institutions that are to be privatized similarly done to SLT.

“Due to privatization the country received a better telecommunication landscape and even the employees got better returns. He said that for several years that there is a talk to privatize SriLankan and nothing has taken place.

“This is very unfair for SriLankan as it created uncertainty among employees which is very unfair and creates a bad service and also leads to brain drain.”

He said that SriLankan was sold to Emirates for USD 72 million and after the government took it back, Emirates was only paid back USD 52 million.

He also said that some SOE’s say they are making profits but when you look at the books some of the outstanding loans have not been accounted for. He said that the SOE reforms should be done soon as elections are coming next year and many promises would be given by politicians against privatization.

“However gladly we see a mindset change from people and unions against privatization.”

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