Sri Lanka to Sell Stakes in State Firms through Public Share Issues

17th October 2010, www.sundaytimes.lkBy Duruthu Edirimuni Chandrasekera

The government is looking to sell stakes in state-owned entities in the near future through public share issues, according to officials. They said that after SriLankan Airlines Catering and Shell Gas goes public, Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB), SriLankan Airlines, ITN and Sri Lanka Insurance Corporation (SLIC) will follow suit.

Media Minister Keheliya Rambukwella also confirmed this and told the Business Times that the government is favourably looking at selling stakes in these institutions. “The time is right (to list) and all indicators are pointing favourably at listing.

The concept of the government at present is to ‘give to the people’ so that they will have a say,” he said, adding that such public participation in these entities will facilitate the people to voice their opinions (at Annual General Meetings).

A team of experts from the Treasury, the Central Bank and some financial consultants are working on the modalities of listing these entities. “They are planning the strategies taking into consideration the mood in the share market and the interest of the people,” he said.

Highly placed sources told the Business Times that many of these entities are debt ridden and that the government is discussing to list about 15 to 20% of each entity at the Colombo Stock Exchange to initially retire their debts and then streamline these entities.

“Listing brings in better corporate governance and better performance to these entities,” one source said. Minister Rambukwella added that the government is constantly realigning its strategy and will infuse private sector participation while keeping the people’s interest at heart when going for Initial Public Offerings.

Nishantha Wickremasinghe, Chairman SriLankan Airlines (SLA) told the Business Times that SriLankan Airlines is planning to divest a part of its fully owned catering unit through a public listing to raise around Rs 60 million. He said that SLA is planning to separate its MRO Department – Maintenance, Repairs and Overhaul - into another subsidiary. “We will form a separate firm at Mattala, Hambantota with a larger engineering facility,” he added, noting that this company too will be listed at a later date.

He said that SLA is also planning an aeronautical engineering academy to be formed in the same area to train technicians. “We can attract international students with such a facility and also retain local engineering students,” he noted. He added that this entity too will be listed in time to come. “After this we’ll consider an SLA listing,” he added.