Though many argue that divesting profit-making State Owned Enterprises (SOEs) will dry up regular revenue due to the State, this is a completely false presumption, Director General, State Owned Enterprises Restructuring Unit (SRU) Suresh Shah told the Sri Lanka Economic Summit organised by Ceylon Chamber of Commerce in Colombo last week.
Citing an example, he said that currently Sri Lanka Telecom Mobitel gives an annual dividend of almost Rs. 1 billion to the Government. “However, if the entities’ shares in the Colombo Stock are divested it can fetch around Rs. 80 billion.”
He said that when this money is deposited it can bring in an annual interest of around Rs. 8 billion to the State per annum. “Hence, the argument that divesting profit making SOE ventures will dry up state revenue doesn’t hold water.”
He said with an annual interest rate of Rs. 80 billion earned from the proposed divestment of SLT shares, the Government can provide more hospitals beds, build and operate more schools, improve the road network and provide many other similar benefits to the public.
The same theory can be put forward to other profit-making SOEs that are under the divestment radar.
He said that to upkeep some of the SOEs, the Government has to dole out a huge amount of money which could be given for the people’s welfare.
The Ceylon Petroleum Corporation was making huge losses as it had to provide fuel at concessionary rates and it also helped the Ceylon Electricity Board to provide power at a lower tariff to the people which resulted in that institution also making losses, Shah said.
“Sri Lanka’s ‘welfare attitude’ towards the people is one main cause for the economic crisis where the country had to even borrow from countries such as Bangladesh which was formed after Sri Lanka.”
He said that countries such as Argentina had also sold their airports to the private sector and are reaping economic benefits. “However, in Sri Lanka sensitive SOEs will not be given to the private sector. Hydropower generating institutions will not be given out as they also have to provide water for irrigation and drinking purposes.
Shah said that a transparent process would be followed when calling for tenders via local and international media is being done and guaranteed that there would not be any unsolicited proposals or political favourites when divesting SOEs.
He said that restructuring the CEB was discussed way back in 2001 but was abandoned when the Government changed and that at least this time the Government must go ahead with it.
