Top 52 SOEs record combined losses of Rs 30.286B

By Ishara Gamage | Published: 2:00 AM Jul 7 2020
FT Top 52 SOEs record combined losses of Rs 30.286B

By Ishara Gamage

Sri Lanka’s 52 key State-owned enterprises (SOEs) have reported a combined loss of Rs 30,286 million during the first four months of this year, as stated in the Mid-Year Fiscal Position Report for 2019 issued by the Minister of Finance.

According to the report, the collection of levy and dividend from the SOEs has limited to Rs 2,862 million in the first four months of 2020, compared to Rs 3,193 million in the same period of 2019. 

“The Government made a significant additional financial support through budgetary transfers and issuing Treasury guarantees to the SOEs including SriLankan Airlines, Ceylon Electricity Board, Lanka Salusala, Lanka Sathosa, State Engineering Corporation, Janatha Estates Development Board etc., to continue their business operations under a difficult economic condition,” it stated.

SriLankan Airlines

The national carrier SriLankan Airlines (SLA), only during April and May 2020, recorded US$ 27.1 million total traffic revenue while incurring a loss of US$ 48.7 million. 

Meanwhile, SLA is expected a most likely loss of US$ 185.3 million for 2020/21 accounting period due to the adverse impact of COVID-19 on the aviation industry. 

SLA is trying to obtain Government support to turn its books around, including the provision of a US$ 75 million Treasury guarantee to be granted to Bank of Ceylon (BOC) and People’s Bank (PB) to explore funding options, a Sovereign guarantee of US$ 5 million to international banks to enable SLA to release cash security to an aircraft lessor to release cash deposits, restructuring its current loans with BOC and PB to long-term loans, and exemptions on tax, interest and charges by the Government and Government institutions.

Ceylon Electricity Board (CEB) 

The report also stated that due to the COVID-19 pandemic, electricity demand has declined by 15 per cent to 4,016 Gwh in the first four months of 2020, compared to the 4,712 Gwh in the same period of 2019.

Due to this lowered demand, revenue from the sale of electricity has declined by 14 per cent to Rs 67,213 million in the first four months of 2020, compared to Rs 78,254 million in the same period of 2019. 

Accordingly, CEB has recorded an operating loss of Rs 25,905 million in the first four months of 2020, compared to Rs 23,115 million in the same period of 2019. 

The collection of revenue was disturbed from mid of March 2020, which has resulted in an increase in the outstanding obligations to State banks to Rs 107,902 million as at end-April 2020, from Rs 89,420 million at the end of 2019. 

However, the total outstanding obligations of CEB to Ceylon Petroleum Corporation (CPC) and to Independent Power Producers (IPP) declined to Rs 100,904 million as at end-April 2020 with the Government’s initiation to channel Rs. 48,000 million to CEB through FPSF to enhance liquidity position of the CEB as well as the CPC, Bank of Ceylon and People’s Bank. 

Ceylon Petroleum  Corporation (CPC)

The operational profit of Rs 1,494 million recorded by the Ceylon Petroleum Corporation (CPC) in the first four months of 2020 was converted to an overall loss of  Rs 45,142 million due to the foreign exchange loss of Rs 43,890 million. Further, CPC experienced difficulties in reaping optimal benefits over the historically low global oil prices due to the reduction in demand for the petroleum products by around by 18 per cent to 1,790 million litres in the first four months of 2020, compared to the demand of 2,117 million litres in the same period of 2019.

The CPC’s cash flow constraints were further deteriorated as total receivables from CEB and Srilankan Airlines enhanced to Rs 148,918 million at the end of April 2020. The accumulated loss and the working capital requirements of the CPC have been mainly financed through loans obtained from two State banks, which has resulted in the total banking sector exposure to CPC reaching Rs 592,730 million as at end-April 2020, creating more pressure on debt servicing on CPC’s balance sheet. 

Bank of Ceylon (BOC)

The asset base of BOC increased by 8.4 per cent to Rs 2,617 billion as at end-April 2020, from Rs 2,415 billion as at end-2019. During the first four months of 2020, the deposit base of the bank increased by 5.5 per cent to  Rs 2,116 billion, compared to  Rs 2,005 billion as at end-2019. 

The gross non-performing loan ratio of the bank has deteriorated slightly to 5.1 per cent as at end-April 2020, compared to 4.8 per cent as at end-2019. The foreign exchange income of Rs 4.8 billion recorded in the first four months of 2020, in comparison to the foreign exchange loss of 

Rs 1.4 billion during the same period of 2019, has resulted in the bank recording an increase in profit before tax by 49 per cent to Rs 10.9 billion, over the first four months of 2019. 

People’s Bank (PB) 

PB’s asset base increased by 6.6 per cent to Rs 1,997 billion as at end-April 2020 from Rs 1,873 billion as at end-2019. The deposit base of the bank increased marginally to Rs 1,563 billion as at end-April 2020 from Rs 1,491 billion as at end-2019. Loans and advances increased by 10.9 per cent to Rs 1,535 billion in the first four months of 2020. Non-performing loan (NPL) ratio of the bank has increased marginally to 3.4 per cent in the first four months of 2020. PB recorded a profit before tax of Rs 6.8 billion in the first four months of 2020, compared to  Rs 6.6 billion in the same period of 2019.

By Ishara Gamage | Published: 2:00 AM Jul 7 2020

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