STATE OF THE STATE
Sri Lanka’s state owned enterprises
viewed in a new light
State owned enterprises (SOEs) commonly refer to entities over which the government or state has a fair or high degree of control – through full, majority or significant minority ownership – while they may also have public policy objectives.
In Sri Lanka, SOEs are governed by the Finance Act (No. 38 of 1971) and the Companies Act (No. 07 of 2007), and they play an integral role in the economy with strategic interests in critical spheres such as energy, water, ports, banking and insurance, commuter transportation, aviation and construction.
According to data published by the Department of Public Enterprises (PED) of the Ministry of Finance, SOEs accounted for 13.3 percent of GDP in 2018.
Presently, 287 SOEs are monitored by the PED, of which 54 have been identified as strategically important SOEs playing a catalytic role in transforming the economy towards a high growth trajectory.
In 2018, total revenue generated by these 54 SOEs amounted to Rs. 1.9 trillion with 37 recording a net profit amounting to 131 billion rupees and 16 reporting net losses of Rs. 157 billion.
With a view to enhancing the performance of SOEs, the PED introduced the concept of Statements of Corporate Intent (SCIs) – tripartite agreements containing key performance indicators (KPIs) targeting the main activities of entities – in 2017.
This model was initiated with regard to five major SOEs – viz. the Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB), Sri Lanka Ports Authority (SLPA), Airport & Aviation Services (Sri Lanka), and National Water Supply and Drainage Board (NWSDB).
SCIs are monitored by PED, which submits a periodic progress report to the cabinet of ministers.
Set against this backdrop, this maiden special edition of ‘State Enterprises’ seeks to highlight the role of SOEs amid COVID-19 and the positives that have come out of the pandemic along with a snapshot of the financial performance of the sector.
To this end, a selection of leading personalities who helm the state sector share their views vis-à-vis creating value for the nation, as well as their thoughts on the future of state enterprises, their efficiency and development for the betterment of the nation.
– LMD/Media Services