Cabinet nod to establish State-Owned Enterprise Restructuring Unit

• The Cabinet nod has been granted to establish State-Owned Enterprise Restructuring Unit 
• facilitate restructuring of State-owned enterprises (SOEs) as proposed in 2022 revised budget

President Ranil Wickremesinghe on Monday sought the approval of the Cabinet of Ministers to establish the unit under the Ministry of Finance, Economic Stabilisation and National Policies in order to guide and assist as necessary to restructure the public enterprises with the objective of identifying the methods for minimising the financial burden shouldered by the General Treasury as well as to enhance the overall performance of SOEs.
A sum of Rs.200 million was allocated in the 2022 revised budget for this initiative.

“The performance of commercial enterprises owned by the government was not satisfactory for a long time and some of those enterprises are continuously running at a loss. Since this has alarmed the General Treasury causing extreme pressure, a remedial mechanism should be introduced for maintaining such enterprises more efficiently and productively,” the Department of Government Information reasoned.

President Wickremesinghe last week highlighted that significant financial sector risk posed by some of loss-making SOEs such as SriLankan Airlines, CPC and CEB due to their large volumes of debt predominantly owed to State banks.
“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,” he cautioned.

During the first four months of 2022, 52 key SOEs reported a staggering Rs.860 billion in cumulative losses exceeding the annual loss of Rs.86 billion in 2021, though the losses were bloated by the sharp depreciation of the rupee.
In addition, the government also plans to re-activate the Statement of Corporate Intent (SCI)  process for key 50 SOEs to closely monitor the set targets (excluding CEB, CPC and Sri Lankan Airlines). The government is currently in the process of restructuring of CEB, CPC and SriLankan Airlines.