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Government shortlists advisors for sale of four SOEs to boost forex reserves. 

In a strategic move of attracting US$ 2-3 billion from the restructuring of profit making State owned Enterprises (SOE’s), which is critical in current economic context, The Government has short-listed transaction advisors to assist in the divestiture of four SOEs finance ministry souces confirmed. .

They are Sri Lanka Insurance Corporation Ltd., Hotel Developers Lanka Ltd (Hilton Hotel Colombo), Canwill Holdings Ltd (Grand Hyatt Hotel), and Litro Gas Lanka Ltd including Litro Gas Terminals Ltd (LPG retailing).

The short listing follows the evaluation of the about a dozen Expression of Interests (EOIs) received by the Standing Cabinet Appointed Consultant Procurement Committee of the State Owned Enterprise Restructuring Unit, within the Finance Ministry.

The short listed for the advisory role in Sri Lanka Insurance Corporation are Asia Securities, Capital Alliance, Deloitte, PwC and CT CLSA.

For Hotel Developers, the shortlisted are Asia Securities, Capital Alliance, Platinum, Deloitte, and PwC.

For Canwill Holdings, the parties are Asia Securities, Capital Alliance, Platinum, Deloitte and PwC. For Litro the shortlisted are Asia Securities, Capital Alliance, Platinum, Deloitte, PwC and NDB.

The deadline for EOIs was extended till May6 from the original date of April 27 based on multiple requests. 

A report published by the Ceylon Chamber of Commerce stated that 83% of the profit of all the SOE’s are generated by six entities, and 97% of the losses are made by five entities in 2020.

 This report went on to state that 52 SOE’s had absorbed Rs. 920 billion worth of bank credit, in addition to Rs. 75 billion worth of support from the Treasury.

The restructuring of loss making SOE’s can help curtail Government expenditure and guaranteed credit. Profitable SOE’s can be a strong source of tax revenue for the Government while boosting foreign investor confidence and, help attract more FDI, several economic experts said.  

The restructuring of loss making SOE’s can help curtail Government expenditure and guaranteed credit. Profitable SOE’s can be a strong source of tax revenue for the Government.

Political consensus is key to successful SOE reform, and broader economic reform, which are prerequisite to Sri Lanka’s economic recovery. 

Sri Lankan politicians have not demonstrated the ability to build political consensus on key economic strategy, and this is a contributor to our economic destruction. 

President Ranil Wickremesinghe has demonstrated his commitment to the reform process. He needs the support of his Government and the Opposition if successful economic reform is to be implemented.

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