September 17, 2019
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    State businesses: Asset base grew by 10 % but revenue losses Featured

    June 22, 2019

    "The total asset base of State Owned Businesses Enterprises (SOBE)s amounts to Rs. 8,204.07 billion in 2018, which grew by 10 percent compared Rs. 7,432.40 billion in 2017 but in 2018, total revenue generated by 54 SOBEs amounted to Rs. 1,916.02 billion, of which 37 SOBEs, recorded a net profit amounting to Rs. 130.66 billion, while 16 SOBEs recorded net losses amounting to Rs. 156.73 billion. In the overall context, SOBEs have recorded a loss amounted to Rs. 26 billion arising from the loss of Rs.104 billion recorded by Ceylon Petroleum Corporation (CPC) " says the annual Performance Report of the Public Enterprises Department


    The Report, which was tabled in Parliament on Wednesday further indicates that the total asset base of SOBEs amounts to Rs. 8,204.07 billion in 2018, which grew by 10 percent compared Rs. 7,432.40 billion in 2017The cost reflective price formula applied since May 2018 may have helped boost the Ceylon Petroleum Corporation’s (CPC) total revenue by 16 percent last year, but the weakening exchange rate has served to further worsen the overall loss incurred by the corporation, one of the country’s largest state-owned enterprises.

    The Report also says the boost in CPC revenue was mainly due to the cost reflective price formula operated by the Corporation since May last year. However, the continued depreciation of the Sri Lanka Rupee against the US Dollar has had a negative impact on the operating and financial performance of the CPC, says the Report, which was tabled in Parliament on Wednesday.

    The report said the CPC’s net loss widened to Rs. 104 billion last year owing to the exchange rate variation of Rs. 82.7 billion.“Although CPC recorded an operating loss of Rs. 22 billion, the exchange rate variation of Rs. 82.7 billion was the main reason for the CPC’s net loss to worsen to Rs. 104 billion. The fluctuation in foreign currency affected the import material and purchase and service obtained from various parties in foreign currency. Non receipt of government outstanding debts and the depreciation of Rupee against the USD had pushed the CPC towards bank borrowings of Rs. 562 billion, an increase of Rs. 224 billion against 2017,” the report noted.

    The Report observed that State Owned Businesses Enterprises’ (SOBEs) overall losses amounting to Rs 26 billion in 2018 arose mainly from the loss of Rs 104 billion recorded by the CPC.

    “In 2018, total revenue generated by 54 SOBEs amounted to Rs. 1,916.02 billion, of which 37 SOBEs, recorded a net profit amounting to Rs. 130.66 billion, while 16 SOBEs recorded net losses amounting to Rs. 156.73 billion. In the overall context, SOBEs have recorded a loss amounted to Rs. 26 billion arising from the loss of Rs.104 billion recorded by Ceylon Petroleum Corporation (CPC),” the report stated.

    The Report also indicated that the SOBEs’ contribution to the national economy by way of non-tax revenue had also declined by Rs. 12,169 million in 2018 compared to 2017.

    “In 2018, SOBEs non-tax revenue amounted to Rs 41,828 million. The sum comprised Rs. 37,230 million as levy and Rs. 4,598 million as dividends. This amount was a decline by 22 percent compared to Rs. 53,997 recorded in 2017. The government channeled Rs. 73 billion as transfers from the budget to support restructuring and expansion of business activities of SOEs during 2018,” the report added.

    According to the report, the SOEs contribution to GDP amounted to 13.26 percent in 2018. “In 2018, total revenue generated by 54 SOBEs amounted to Rs. 1,916.02 billion, of which 37 SOBEs, recorded a net profit amounting to Rs. 130.66 billion while 16 SOEs reported net losses amounting to Rs. 156.73 billion in 2018. In the overall context, SOBEs have recorded a loss amounted to Rs. 26 billion arising from the loss of Rs. 104 billion recorded by Ceylon Petroleum Corporation (CPC).

    The total asset base of SOBEs amounts to Rs. 8,204.07 billion in 2018, which grew by 10 percent compared Rs. 7,432.40 billion in 2017,” the Report indicated.

    The report also highlighted that the Ceylon Electricity Board’s (CEB) borrowings had considerably risen to Rs. 62 billion at end 2018 from Rs. 2.5 billion in 2017. The report however said that the CEB’s debt outstanding to CPC and Independent Power Plants (IPPs) had reduced due to the payments made through borrowings from the state banks.

    “In 2018, CEB has moderately improved its performance by the reduction of operating loss by Rs. 17 billion benefiting from the heavy rains in the water catchment areas. The operating loss in 2018 was Rs.30 billion, compared to the loss of Rs. 47 billion in 2017,” the Report explained.

    With regard to the performance of the National Water Supply and Drainage Board (NWS&DB), the Report said it recorded a significant loss of Rs. 568 million last year against the profit of Rs. 1,877 million recorded in 2017.

    “This was mainly due to the increase in personal cost by 14 percent and finance cost by 1,923 percent. The government has provided capital infusion amounted to Rs. 31,895 million along with the Treasury Guarantees and letters of comfort, considering the liquidity issues faced by the entity due to non-revision of tariff since 2012,” the report stated.

    Commenting on the Sri Lanka Ports Authority (SLPA), the report highlighted that the profits of SLPA were impacted by the exchange rate loss due to the devaluation of Rupee during the year. “SLPA’s profit before tax has reduced by 65 percent to Rs. 4.2 billion in 2018 from Rs. 11.9 billion in 2017 and profit after tax declined by 88 percent to Rs. 1.4 billion in 2018 from Rs.12 billion in 2017,” it analyzed.

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