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| Sunday, 1 February 2004 |
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| News Business Features Editorial
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by Anton Nonis The privatisation of the 13 peoplised bus companies that now comprise the previously State-run Ceylon Transport Board (CTB) is to be freshly initiated through the Public Enterprises Reform Commission (PERC) in accordance with President Chandrika Kumaratunga's recommendation. Worldwide bids are to be called for the purchase of a 39 per cent stake in these thirteen companies and the privatisation will be implemented according to PERC procedures in order to ensure transparency and fairness in the whole process, highly placed official sources told the Sunday Observer. The Government is also learnt to have allocated Rs. 4.5 billion as a back-up for the maintenance of these privatised enterprises in the first three years after divestment. The move follows the President's firm refusal to endorse the Government's previous attempts to privatise some of the peoplised bus companies by-passing the PERC process. In those attempts six companies were up for sale. Those initiatives foundered on serious flaws in the divestment procedure and the failure of bidders (revealed to be under a single ownership) to both come up with sufficient funds as well as satisfactory prove their suitability to manage public bus services. The divestiture of shares of the 13 companies is to be carried out by the Transport Ministry in collaboration with the Public Enterprises Reform Commission (PERC). Director PERC, Chandu Epitawela told the Sunday Observer that the Cabinet Paper in this regard had been submitted to the Government for approval. He said that a `RFP' (request for proposals) document will subsequently be issued to each bidder, which is a sort of an application form in the divestiture process. The RFP also gives the necessary information to bidders on their eligibility, the extent of responsibilities expected of them, short listing of bidders and the manner of selection of successful candidates. Epitawela said that bidders could be either local or foreign and that a bidder would have the option of applying for more than one bus company, depending on his or her financial resources. The bids would be finally processed for the selection of successful candidates. Valuation of the bus companies including the total number of buses infrastructure, number of employees and other assets would be done by Earnst & Young and KPMG Ford Rhodes. They will also prepare an information memorandum for each bus company. Epitawela said that 39 per cent of the bus company shares will be divested with the successful candidates. They will be required to invest in convertible debentures. The debenture money will be utilised to write off some of the liabilities of the bus companies. After a period of three years, the debentures could be converted into shares in the company. The government will offer performance based subsidies for the bus companies in the first three years as a direct measure of assistance in order that the enterprises reorganise themselves and overcome their financial burdens. The Government has set aside a total of Rs. 4,500 million for this purpose for the three year period to be dispensed in the following manner: First year - Rs. 2,500m, second year - Rs. 1,500m, third year - Rs. 500m. The bus companies will continue to issue season tickets for school children and other bus travellers. Bus fare revision, at present, done once a year, will be reviewed twice a year. According to Epitawela, the whole process would take approximately three months to complete. |
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