Special unit to be set up for restructuring state-owned enterprises

The government has decided to establish a “State-Owned Enterprise Restructuring Unit” with the aim of facilitating the restructuring of government-owned business entities.

Presenting the Interim Budget 2022 in the parliament, President Ranil Wickremesinghe further proposed to allocate Rs. 200 million to implement this proposal.

He mentioned that the decision was taken as some of the state-owned enterprises have been making losses on a continuous basis due to issues of structural nature existed for some time.

As these losses cannot be met endlessly by the General Treasury, attention is paid to find an alternative mechanism to make them effective, the President added.

Speaking further on the matter, he noted that major fiscal risks arise from a few key state-owned enterprises (SOEs), particularly in the transportation (SriLankan Airlines) and energy sector (Ceylon Electricity Board and the Ceylon Petroleum Corporation).

These entities face significant losses, negative equity (SriLankan Airlines and CPC) and large volumes of debt that is predominantly owed to the state banks, creating significant sector risk, he explained.

He proposed to re-activate the Statement of Corporate Intent (SCI) process for key 50 SOEs, excluding CEB, CPC and Sri Lankan Airlines, as they are under different efforts to restructure, to closely monitor the set targets.

“These difficult but necessary measures pertaining to SOEs will no doubt be challenging to address, but failing to do so would create catastrophic risks, particularly for financial sector stability, and will entail even higher taxation burdens on the public in the future,” the President added.