Losses likely to top Rs.4tn in 2022 as Sri Lanka embarks on State-owned Enterprises restructuring 

Losses of Sri Lanka’s State-owned Enterprises (SoE) could top Rs.4, 000 billion by the year-end with Ceylon Petroleum Corporation (CPC) and SriLankan Airlines potentially contributing to more than half of such losses.
In the first six months of 2022, the CPC has recorded a loss of Rs.1,057 billion while SriLankan Airlines had reported a Rs.799 billion loss, President Ranil Wickremesinghe told parliament. 

While the Ceylon Electricity Board (CEB) had incurred a loss of Rs.261 billion for the first half of the year, in the first eight months the power utility has contained its losses to Rs.108.6 billion, Power & Energy Minister Kanchana Wijesekara told parliament yesterday. 

It appears that the bumper tariff hike that came in August had managed to lessen the eight-month losses, but Wijesekara estimated Rs.152 billon loss for the balance four months. After the economy collapsed emptying the coffers earlier this year, Sri Lanka embarked on most difficult yet long overdue corrections and reforms with regard to SoEs which were making massive losses. They included cost-reflective pricing formula on petroleum products, liberalisation of the energy industry, opening up the SoEs for private-public partnerships and complete selldowns to private sector to relieve them of budgetary support and make them efficient. 

SriLankan Airlines is a case in point where the government recently announced an invitation of private investors for a sizable stake in the national carrier to end its reliance on the budget.  “We have to make some radical economic reforms,” Wickremesinghe said recently presenting a slew of reforms to help the economy emerge from the current crisis. 

“We have embarked on restructuring our SoEs which have become a burden on our country. For decades, the losses of these institutions were directly and indirectly borne by the people of the country. People were continuously burdened with their losses under the guise of national resources,” he added. Introducing further reforms into the loss-making SoEs, the government yesterday presented the ‘Petroleum Special Provisions Act Amendment’, to parliament for debate.  The amendment is aimed at paving the way for liberalisation of the petroleum industry, which will facilitate the entrance of new global retail suppliers into the sector, encourage new investments and set up a regulatory authority titled ‘Energy Supply Committee.’