Ten bankrupt state entities face liquidation
As the Treasury plans to curtail public expenditure in the 2021 budget, plans are underway to liquidate at least 10 bankrupt state institutions including Mihin Lanka while protecting the interest of their employees who are to be offered compensation, official sources divulged.
Liquidation of these institutions will be carried out without affecting employees and it is a win-win for both government and the staff, the sources added.
According to the special gazette notification published on August 9, the government has brought four institutions under the Ministry of Finance for liquidation. They are the Department of Telecommunications, Wildlife Trust, the Sri Lanka Media Training Institute, and the Internal Trade Department.
In addition six more state entities including Mihin Lanka, Lanka Fabric Ltd, CWG Hambantota, Rajarata Food Grain Ltd, State Resources Management company and Janatha Fertiliser company will face the same fate.
Moreover state- owned National Equipment a n d M a ch i n e r y Organisation and Sri Lanka Rubber Manufacturing and Export Ltd have been closed down pending final decision on liquidation.
Fourteen years after it was set up as a budget airline, Mihin Lanka is being liquidated. In October 2016, Mihin was merged with SriLankan Airlines.
The Auditor General has closed its books a couple of years ago and SriLankan has absorbed 120 of Mihin’s employees while 180 took a voluntary retirement scheme funded by the budget carrier, an audit report revealed.
The Auditor General had examined the expenses of the bankrupt CWG Hambantota 2018 ( Pvt) Ltd from November 23, 2010, to May 31, 2013, its initial share capital, financial donations to it, its financial statements and legal matters in relation to its liquidation.
“The total amount of funds received from public institutions, donations from the private sector and interest income from banks was Rs. 698.9 million,” the report said.
It was discovered that Rs 570.8 million had been received from the private institutions and 85 individuals, but formal receipts had not been issued to them. Out of that sum, Rs. 120.4 million had been directly obtained in cash.
The total loss suffered by Janatha Fertiliser Company was Rs. 13.5 million as at July 31, 2012, and Lanka Fabrics Ltd – Rs. 15.7 million as at March 31, 2010, official data showed.
During the first four months of 2020, the key 52 state- owned Enterprises (SOEs) reported a significant loss of Rs. 35,310 million, a Finance Ministry report revealed.
Also, the collection of levy and dividend from the SOEs was limited to Rs. 2,862 million in the first four months of 2020, compared to Rs. 3,193 million in the same period of 2019.
The government made a significant additional financial support through budgetary transfers and issuing Treasury guarantees to the SOEs including SriLankan Airlines, Ceylon Electricity Board, Lanka Salusala, Lanka Sathosa, State Engineering Cor poration, Janatha Estat e s Development Board etc to continue their business operations under a difficult economic condition, the sources said.