June 16, 2011 (LBO) – Some state owned enterprises (SOEs) in Sri Lanka that made losses, violated policies and were a drain on taxes and growth, needed immediate action to fix them, the finance ministry has said. “Lack of good corporate practices and management lapses have resulted in compromising the SOEs ability to manage risks that arises from both internal and external factors, has in turn
weakened the balance sheets of SOEs,” a frank assessment by the ministry said.
Though the policy of the state was to improve management, state enterprises lacked human capital and their boards of management have not shown a ability to lead them in a dynamic way.
Ceylon Petroleum Corporation and Sri Lanka Transport Board were making losses partly due to state controlled prices.
“..[O]ther loss making SOEs continued to incur losses due to lack of good governance, low productive use of employees, weak financial management, lack of internal controls and structural deficiencies,” the report said in a frank assessment.
“It is noted that Boards of management of some key SOEs, which have often made decisions that were neither socially nor economically viable, violating the governmen