Government to set up holding company to expedite SOE reforms
The Government is to set up a holding company with 100 percent equity ownership vested with the Treasury Secretary and to make necessary arrangements to bring identified SOEs under this entity for restructuring.
The proposal is based on expert advice of the newly established SOE Restructuring Unit to expedite the restructuring process of SOEs.
The proposal to establish a separate agency was also made by the Ceylon Chamber of Commerce last month suggesting a right model to adopt for the SOE restructuring agency (announced in the Interim National Budget for 2022) in order to provide the agency with the authority and power to carry out the required SOE Reforms.
It has also put forward a framework for practical implementation of SOE reforms after careful analysis of the role played by each SOE.
Accordingly, Cabinet Spokesperson and Minister of Transport and Highways and Minister of Mass Media Bandula Gunawardana said all identified SOEs including fully state-owned, partially owned and other forms of SOEs would be made subsidiaries of the proposed holding company.
Some of the entities targeted for restructuring are state-owned companies of which the government is the majority shareholder. Some state-owned enterprises operate as corporations,” the Government Information Department noted.
Gunawardana stressed that the SOE restructuring programme is critical to meet the country’s import bill and otherwise he warned that the country risks an economic collapse as similar to countries such as Zimbabwe and Sudan.
“A large number of SOEs are incurring losses and the burden is on the public. We cannot continue this moving forward. We need to expedite the SOE restructuring process in order to assure a continuous flow of imports,” he added.
In 2021, the Treasury exhausted Rs.367 billion to maintain the operations of 430 SOEs.
SOE reforms also remain a critical part of the IMF staff-level agreement for the US$ 2.9 billion bailout package. It has recommended the government to restructure the Ceylon Electricity Board, Ceylon Petroleum Corporation and SriLankan Airlines immediately.
In addition, the government recently announced its intention to restructure Sri Lanka Telecom PLC.
President Wickremesinghe presented proposals to restructure SOEs in the interim budget of 2022 as well as in the budget presented for the year 2023.
According to State Minister of Finance Ranjith Siyambalapitiya, the government is considering various models to restructure the identified SOEs from implementing structural changes to divesting 49 percent stake in such SOEs