Business

Govt. signs Statements of Corporate Intent with 10 SOEs

The Government signed Statements of Corporate Intent (SCIs) with 10 selected state-owned enterprises (SOEs) on 10 June at 5 p.m. at the Randora Auditorium, Ministry of Finance.

The Department of Public Enterprises (PED) introduced the concept of SCI in 2017 with a view to enhance the performance of SOEs. This concept was approved by the Cabinet of Ministers on 7 February 2017 and was initiated by signing SCIs with five Key SOEs; Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB), Sri Lanka Ports Authority (SLPA), Airport and Aviation Services (Sri Lanka) Ltd. (AASL), and National Water Supply and Drainage Board (NWSDB) on 15 March 2017.

Subsequently, followed by the approval of the Cabinet of Ministers, it was planned to sign SCIs with another 10 selected SOEs; Sri Lanka State Plantation Corporation, Urban Development Authority, Lanka Sathosa (Pvt.) Ltd., Central Engineering Consultancy Bureau, State Timber Corporation, Kurunegala Plantation (Pvt.) Ltd., State Pharmaceuticals Corporation, Milco (Pvt.) Ltd., National Livestock Development Board, and Geological Survey and Mines Bureau.

SCI is a tripartite agreement, signed between the Secretary to the Ministry of Finance (MOF), secretary of the relevant line ministry, and the chairman of the respective SOE on behalf of the board of directors with the mission of creating a platform for SOEs to operate in a commercially viable manner in order to achieve macroeconomic objectives of the country.

The SCI contains the following objectives; to operate SOEs in a budgetary independent and commercially viable manner, to improve corporate governance practices, to strengthen financial management, to strengthen human resource management, to change the operational culture and reengineering the business process, to improve the transparency and accountability in operations, to ensure efficient and effective business operations, and to generate reasonable return on investment. Moreover, the SCI contains key performance indicators linked to the corporate plan, action plan, and annual budget of the SOEs spread over the time horizon of three years. In addition, the impact of all noncommercial operations of the SOEs are also taken into account and included in the SCI.

The SCI would contribute positively to the strategically important SOEs in aiding them to achieve Sri Lanka’s economic goals by enhancing their contribution to the GDP of the country. In achieving the set objectives of these SOEs, the key expectations of the Government are to encourage and facilitate these SOEs to improve their operational and financial efficiency through improved corporate practices, innovative financing, strong and prudent financial management, exposure to competitiveness and international best practices, and effective human resource management while enhancing public accountability. The effectiveness of the SCI process will depend fundamentally on the extent to which the SCI will be used as a management tool by these SOEs and line ministries. The progress will be monitored by PED, which will then submit a progress report to the Cabinet of Ministers, periodically.

On the success of the implementation of this programme, the Government is expecting to extend this move to the other 400 SOEs in time.