38 SOEs now earn profits following reform process
Some 38 state-owned enterprises (SOEs) out of 52 strategic ones with powerful trade unions are now running at a profit after massive losses in the recent past.
This SOE transformation to profitable entities was the result of the government’s reform measures adopted during 2022/23 including cost-reflective electricity tariff adjustment, implementation, of fuel price formula and revision of water tariff, among others, the Finance Ministry’s latest fiscal report revealed. The reform measures are expected to reduce the credit risk on SOEs’ borrowings from the banking sector.
The comprehensive strategy to restructure the balance sheets of four key SOEs i.e. Ceylon Electricity Board (CEB) Ceylon Petroleum Corporation (CPC), Road Development Authority (RDA), and SriLankan Airlines Ltd. (SLA), has eased the burden on fiscal operations in the medium term, the report pointed out.
In the first eight months of 2023, two new players entered into the downstream petroleum retail market, which in turn enhanced the competition of the industry.
In response to the pressing need for SOE reforms, a restructuring policy for SOEs, a special guideline on divestiture of SOEs has been introduced for SLA, Sri Lanka Telecom PLC (SLT), Lanka Hospitals Corporation PLC (LHC), Sri Lanka Insurance Corporation Ltd (SLIC), Canwill Holdings (Pvt) Ltd, Hotel Developers (Lanka) Ltd (HDL) and Litro Gas Lanka Ltd (LGL).
In the meantime, the Treasury also entered into agreements of Statement of Corporate Intent with five SOEs with a view to improve the performance through performance oriented culture.
Considering the SOEs performances, the total loss of the key 52 SOEs amounting to
Rs. 726.9 billion in the first eight months of 2022 was converted into a total profit of Rs. 311.5 billion in the same period of 2023 of which 38 SOEs recorded a profit before tax of Rs. 338.5 billion and the balance 14 SOEs reported a net loss of Rs. 27 billion, the report disclosed.
The CPC has contributed to 26.2 per cent of the total profit of 38 SOEs during the 8-month period.
The levy/dividend collection increased to about Rs. 22.2 billion in the first eight months of 2023, compared to Rs. 17.8 billion in the same period of 2022.