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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Losses Double..

Losses Double..

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1Losses Double.. Empty Losses Double.. Thu May 09, 2019 12:55 pm

Uaecoindubai

Uaecoindubai
Manager - Equity Analytics
Manager - Equity Analytics

Combined losses at six key state utilities rose 144 percent from a year earlier to 165.3 billion rupees in 2018 mainly due to the collapse of Sri Lanka's soft peg; these losses amounted to about 1.1 percent of the island's gross domestic product that year.

These agencies, which provide energy, transportation, aviation, ports and water related services were also constrained by controlled pricing, weak infrastructure and poor management, according to the Central Bank's 2018 annual report.

Losses at Ceylon Petroleum Corporation soared to 104 billion rupees, against a profit of 3.4 billion rupees a year earlier.

The average price paid by CPC for crude oil was 76.25 US dollars a barrel in 2018, up 32 percent from 57.79 US dollars a year earlier. Refined fuel imports rose 25.3 percent to 650.2 US dollars per metric tonne.

A pricing formula was introduced in May 2018 to reflect global oil price movements, but it was a little too late.

"CPC's financial performance deteriorated substantially during 2018, amidst rising global oil prices, depreciation of the rupee against the US dollar and the non-adjustment of domestic retail petroleum prices until May 2018," the Central Bank said in its 2018 annual report.

Also, Sri Lanka's soft-peg collapse led to 83 billion rupees in losses from a depreciating rupee at the CPC. The corporation's bank borrowings rose nearly three-fold from a year earlier to 293.2 billion rupees by end 2018.

Receivables from government agencies amounted to 82 billion rupees in the year, down 10 percent from a year earlier with energy utility Ceylon Electricity Board (CEB) owing 48 billion rupees at end 2018 and national carrier SriLankan Airlines owing 26 billion rupees to the petroleum agency.

During the year, Ceylon Electricity Board saw losses fall 37 percent to 28.9 billion rupees on improved hydropower generation.

The energy utility's annual fuel bill fell 28.2 percent during the year to 41.6 billion rupees as rains filled up the catchment areas.

Cost of electricity at the point of sales fell to 19.13 rupees per kWh, down from 20.06 rupees the previous year.

National carrier Sri Lankan Airlines continued to haemorrhage. Losses fell deeper into the red, down 56 percent from a year earlier to 18.6 billion rupees.

Attempts at enhancing operational efficiency through improvements in fuel efficiency, changes in flight schedules and aircraft fleet has been carried out during the year, the central bank said.

"A ten-member expert committee was appointed in January 2019, which has already made recommendations on key areas for a restructuring strategy," it said.

Sri Lanka Railway losses fell 9 percent to 6.9 billion rupees.

The rail system is deteriorating due to out-dated technology, inadequate service, lack of skilled labour and poor administration, the central bank said.

"(This) should be addressed through public and private investment aimed at improving service delivery," it said.

The Department of Posts made losses of 5.1 billion rupees, 9 percent lower than the previous year.

The water supply and drainage utility reported a 1.8 billion rupees loss in 2018, reporting a 25 percent loss of water it treats due to leaky pipes.

However, two of the eight utilities reported by the central bank made profits that year.

Sri Lanka Ports Authority reported a profit of 8.7 billion rupees, down 28 percent from 12 billion rupees a year earlier, with foreign exchange losses increasing 413 percent to 11.3 billion rupees.

Sri Lanka Transport Board which operates a fleet of busses saw profits grow 5 percent to 2.2 billion rupees.

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