“Frequent change of Heads harmful to continuity and consistency of SOEs”

Frequent change of Heads of State Owned Enterprises (SOEs) does not allow continuity and consistency, SOE Restructuring Agency Chairman Suresh Shah says.

“When a cabinet reshuffle occurs or a new political party comes to power, the Head of SOEs changes. This needs to be changed,” Shah told the ‘Economic Summit 2022’, held at Shangri La Hotel, Colombo.

Shah stated that multiple points of instruction that SOEs require to adhere lead to confusion on one hand and internal politics on the other hand. Speaking on the SOE restructuring process, Shah said divestment is part and parcel of the process, but not the only thing that comes under the restructuring process.

He also stressed the need to break the vicious cycle that can lead to systematic issues relating to the SOEs.

“If you take Ceylon fCorporation, (CPC) they sell fuel to all of us until recently at a subsidized rate. In order to recover some of these losses, CPC has resorted to selling jet fuel to Sri Lankan Airlines at a premium.”

SriLankan is compelled to borrow from state banks when the Airline makes huge losses and that would put immense pressure on bank balance sheets.”

Shah stated that it is important for us to allow the Government to focus on its principal responsibilities such as law and order, national security, design and implementation of good policies, regulations, foreign affairs and leave other important matters to people who know how to do them better.

He said further the Government’s procumbent processes which drag from one week to sometimes three months does not allow for competitiveness of SOEs as well.

Shah added that the SOE Restructuring Agency would also require a significant amount of funding from multi- lateral agencies.

“We would need transaction advisors and experts to advise on strategy when it comes to certain SOEs,” Shah added.