- No exception for RDA under IMF agreement
- 3 Maga Neguma subsidiaries to cease to exist
In terms of the agreement that Sri Lanka has reached with the International Monetary Fund (IMF), the Road Development Authority (RDA) will have to restructure its balance sheet, which will involve the winding up of the three Maga Neguma companies.
Speaking to The Sunday Morning Business, RDA Director General L.V.S. Weerakoon stated that contrary to certain rumours, the IMF agreement did not require the restructuring of the RDA.
“The RDA is not required to be restructured like certain State-Owned Enterprises (SOEs). Instead, we are required to merely restructure our balance sheet, which involves restructuring certain financial facilities that have been obtained,” he stated.
He revealed that this balance sheet restructuring would also involve the winding up of certain idle and defunct subsidiaries of the RDA, such as the three Maga Neguma companies – Maga Neguma Construction Equipment Company, Maga Neguma Emulsion Production Company, and Maga Neguma Consultancy and Management Company.
Elaborating further, he stated: “There are certain subsidiaries which are not functioning, such as the Maga Neguma companies. Obviously, they have no work at present and the employees are just idling. We can’t continue to pay their salaries. Therefore, we are considering winding up the companies following the payment of compensation to these employees.”
He revealed that the RDA would also be winding up its expressway bus subsidiary as well.
Weerakoon shared that he did not expect any opposition from the employees of these subsidiaries, since the employees themselves had requested the winding up of the respective defunct companies.
The former Road Planning and Development Company, which at one time existed under the RDA, was terminated to establish Maga Neguma Construction Equipment Company Ltd., Maga Neguma Emulsion Production Company Ltd., and Maga Neguma Consultancy and Management Company Ltd. in 2014.
Maga Neguma Construction Equipment Company provided construction equipment and machinery to those engaged in road sector development, on recovery of hire charges, and undertook road construction works not exceeding Rs. 100 million awarded by the RDA.
Maga Neguma Emulsion Production Company was involved in the manufacture of emulsion, pre-mix, etc. and supplied the same for road sector development works.
Maga Neguma Consultancy and Management Company provided consultancy services for the preparation of bills of quantities, project proposals, etc.