Four loss-making SoBEs to be immediately restructured under independent management
View(s):Four loss-making, state-owned Business Enterprises (SoBEs) – Lanka Salu Sala Ltd, National Paper Company Ltd, Sri Lanka Cement Corporation and Lanka Cement Ltd are to be restructured with independent management under the newly established Ministry of Pubic Enterprise Development, government officials said.
Based on a cabinet decision, the immediate priority of the Ministry is to turn around these units to profit making ventures by introducing best management, innovative structures and infusing capital investments. Deputy Minister of Public Enterprise Development Eran Wickramaratne said the goal of his Ministry was to transform SoBEs to provide quality products at a competitive rate focusing mainly on the consumers.
“The Ministry has been entrusted with the task of reducing the burden on the Treasury and the burden on the taxpayer in maintaining loss-making SoBEs,” he disclosed adding that the main reason why these institutions were put together was to monitor their performance, management and thereby reduce political interference leaving more space for improvement for the managers to focus on the economic and financial goals.
The ministry will formulate policies in restructuring these entities while taking pragmatic measures with regard to immediate problems of ownership and management, he disclosed. The Cabinet has approved the provision of funds for the payment of salaries of these four entities up to December this year from the Treasury on a proposal submitted by the Minister of Industry and Commerce Rishad Bathiudeen.
He briefed the cabinet on the current situation of these institutions with their financial difficulties and the inability of paying the salaries to their staff. Minister Bathiudeen revealed that of the total number of 218 Salu Sala workers, 71 are staying at home for months while their salaries continue to be paid in full with Treasury funds.
Salu Sala’s monthly turnover was Rs.1.2 million and its expenditure was running into Rs. 9 million with the cost of salaries of the entity running to Rs. 6.4 million, he said adding that the debt is at Rs. 1 billion. According to the draft income statement of Salu Sala for the financial year
1 April 2013-31 March 2014, it incurred a net loss of Rs. 14.8 million, down from Rs. 57 million from the previous financial year ending 31 March 2013.
The Sri Lanka Cement Corporation (SLCC) is on the verge of becoming completely dysfunctional due to lack of funds generated to run the corporation.
Factories of the SLCC and Sri Lanka Cement Ltd located on a 741-acre land in Kankasanthurai (KKS) came to standstill in 1990 during the war and the premises where it located came under the army control within the KKS High Security Zone.
SLCC had been importing cement to supply the demands of the local market but it has now come to a stage where the corporation has run out of funds even to import cement to make it profitable due to the alleged discrepancies under the previous managements officials alleged.
Embilipitiya and Valaichchenai Paper Mills owned by the National Paper Company Ltd were also on the verge of collapsing, they disclosed.
Embilipitiya Paper Mills was given on a 30-year lease to an Australian firm, Perth Engineering and Maintenance (Pvt.) Ltd by the previous regime for Rs 400 million. The deal was signed by the Australian firm’s local offshoot, Aus-Lanka Paper Company (Pvt) Ltd.
Just a year after operation (in 2012), the company stopped its operations and abandoned the property in an irregular manner, officials said.
The Aus-Lanka Paper Company (Pvt) Ltd had obtained a loan from a local bank by mortgaging the machinery of the mill. The deal is now under investigation.