A State-Owned Enterprise Restructuring Unit (SRU) has been set up by the Government, under the Ministry of Finance, Economic Stabilization and National Policies, in an attempt to implement structural reforms to accelerate growth so that the country can emerge out of the current economic crisis.
The decision was taken in view of the fact that the State-Owned Enterprise (SOE) sector has been a severe burden on the country’s economy for several years.
Accordingly, the Cabinet of Ministers has approved, in principle, the divestiture of various companies, including SriLankan Airlines, SriLankan Catering, Sri Lanka Telecom (SLT), Sri Lanka Insurance Corporation (SLIC), Canwill Holdings (Grand Hyatt Colombo), Hotel Developers Lanka (Hilton Hotel Colombo), Litro Gas Lanka, Litro Gas Terminals and Lanka Hospitals.
The SRU will appoint reputed, qualified and experienced consultancy firms and development financial institutions to provide transaction advisory services to assist with the divestitures, while the process of selecting such transaction advisors is due to commence shortly.
The transaction advisors will, inter-alia, assist the SRU with sell-side due diligence, valuation, data room creation, transaction strategy and marketing of the entities to be divested.
The divestiture program will be carried out by the SRU in a transparent and credible manner and investor selection will commence with an EOI / RFP process to be published in the local and international press.
Issuing a statement in this regard, the Finance Ministry noted that these reforms are expected to contribute towards higher economic productivity by reducing market distortions, increasing organizational efficiency and improving the quality of service to the public.
The State-Owned Enterprises Restructuring Unit will be assigned to study the methodology of restructuring the national carrier SriLankan Airlines and make recommendations to the Cabinet of Ministers.
This action has been taken following a revelation made by President Ranil Wickremasunghe that the Government was looking at raising $ 3-4 billion via sale of certain State-Owned Enterprises (SOEs) to boost foreign reserves.
The new unit has been assigned to study the methodology of restructuring the national carrier SriLankan Airlines and make recommendations to the Cabinet of Ministers, the government said.
The Cabinet of Ministers has decided to handover the responsibility of studying the methodology of restructuring SriLankan Airlines and making recommendations to the said unit.
It was proposed to re-activate the Statement of Corporate Intent (SCI) process for 50 key SOEs, excluding the Ceylon Electricity Board (CEB), the Ceylon Petroleum Corporation (CPC), and the national carrier— SriLankan Airlines, as they are under different efforts to restructure to closely monitor the set targets.
The objective of the new unit is to help to identify ways to reduce the financial burden on the Treasury and to provide necessary guidance and support in the restructuring process of the SOEs.
“The performance of State-owned commercial enterprises has not been satisfactory for a long time and some SOEs are incurring losses due to various reasons,” a statement of weekly Cabinet Decisions issued by the Government Information Department noted.