New PPP framework with ADB, WB assistance
Public Enterprise Board in the offing:
The Government is working with the Asian Development Bank (ADB) and
the World Bank to create a strong public private partnership (PPP)
framework which would lay out clearly the policy, legal and
institutional aspects of contracting PPPs.
“This will go a long way in creating the environment which is
conducive for PPPs. Several countries, including Chile, Brazil,
Malaysia, Peru and South Africa have developed comprehensive frameworks
for encouraging PPPs in development projects,” Development Strategies
and International Trade Minister Malik Samarawickrama said. He was
speaking at the Sri Lanka Economic Summit 2016 organized by the Ceylon
Chamber of Commerce last week.
State-owned enterprises are a part of public wealth and are supposed
to be for the benefit of the people of the country. Therefore, it is
necessary to set up a framework to have State-owned enterprises (SOEs)
managed and operated as efficient commercial enterprises, based on
prudent commercial principles, ensuring adequate returns equal to or
more than the comparable commercial enterprises in the private sector,
he said.
“Therefore, we will introduce a new Public Enterprise Act shortly
comprising members of the private sector, public sector and trade
unions, and will be chaired by a private sector professional.”
The Government has planned some sweeping reforms centred on
private-public-partnerships to reduce debt and improve public revenue
and the reforms are to be presented to the pubic sortly.
“Prime Minister Ranil Wickremesinghe in his forthcoming presentation
of the Five-Year Plan will set out a road map for State-Owned-Enterprise
(SOE) reform and the disposal of non-strategic state assets,” he told a
packed gathering of business leaders, and foreign delegates.
Speaking on the theme ‘The future of public enterprises’, Minister
Samarawickrama said, “it is no longer viable for the government to allow
continued loss making in the SOE sector. The lack of fiscal space,
amplified by the debt burden, simply does not allow for this.
“Through a combination of restructuring and sale of non-strategic
private assets, the government is determined to address effectively this
long-standing problem, which has been a major drag on the development
prospects of the country.”
Among the government’s immediate reform plans are to list some of the
enterprises on the Colombo Stock Exchange. “We will even look at some of
the enterprises which are profitable. Over the next few months it is our
intention to dispose of hotels, Lanka Hospitals and prime commercial
property in Colombo’s business district via the Stock Exchange or
through joint ventures.”
Various options are also being considered for Sri Lankan Airlines on
an urgent basis. “We are also in the process of finalizing PPPs or Joint
Venture arrangements for the Port of Hambantota and Mattala Airport,
thereby reducing the heavy debt burden. These transactions will be
conducted in an open and transparent manner,” he asserted.
Talking about the base for PPPs, the Minister said given Sri Lanka’s
fiscal deficit and debt dynamics, PPPs have an important role to play in
implementing the government’s extensive development program. “PPPs have
the overarching objective of alleviating pressures on government budgets
and allowing the public sector to share risks with the private sector in
the provision of public services.
The added advantage of PPPs is the ability to tap into new
technologies, innovation and efficiency gains, thereby improving the
quality of service.
“There’s evidence to show that productivity gains from PPP projects
can range from 10% to in excess of 70% over purely publicly delivered
projects. However, it is important to ensure that the risks are
appropriately shared between the government and the private providers,”
he said.
The sale of non-strategic state assets will have a positive fiscal
impact at a time when the government’s finances are being constrained by
low revenue and high debt service payments. Where the privatization of
an enterprise is not considered in the national interest, the sale of
minority stakes in commercial SOEs, including through the stock market,
will increase disclosure thereby contributing to the improvement of
operational efficiency, Samarawickrama said.
Sri Lanka is to introduce a law for State-owned enterprises and set
up a Public Enterprise Board with top executives sourced from the
private sector, Trade and Investment Minister Malik Samarawickrema said.
- CJ |