Sri Lanka state enterprises urged to adopt market pricing

Managing Director Kristalina Georgieva arrives and starts her first day of work at the IMF

April 11, 2012 (LBO) – Sri Lanka’s central bank has called on loss-making state enterprises to ensure financial viability by better management and market pricing to reduce reliance on the budget and borrowings that cause macro-economic problems.

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It said that in 2011, policy measures were initiated by the government to improve the performance of SOEs to increase their return on investment.

This was through the development of an “economically feasible cost reflective pricing structure” that could reduce their reliance on the government budget.

“SOEs are also expected to explore innovative Public-Private Partnership strategies and attract private investments to catalyse the development process,” the report said.

The recent fuel price hikes followed by electricity tariff and transport fare increases were “steps in the right direction”, the bank said in its annual report for 2011.

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“Such price revisions are essential to correct adverse macro-economic implications caused by the heavy losses incurred by Ceylon Petroleum Corporation (CPC) and Ceylon Electricity Board (CEB) due to the sale of their products at prices below cost,” it said.

“At the same time, it is important for other State Owned Enterprises (SOEs) providing in

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