Treasury allocates Rs. 56 m for PERC

The Treasury has allocated Rs. 56 million for 2005 for the Public Enterprises Reform Commission, the annual report said. With the work activity getting defined, the Commission's Budget for 2005 was revised to Rs. 87 million.

The Treasury has allocated Rs. 56 million for 2005 for the Public Enterprises Reform Commission (PERC), the annual report said.

With the work activity getting defined, the Commission's Budget for 2005 was revised to Rs. 87 million.

The Commission obtained funds through the Economic Reform and Technical Assistance Project of the World Bank to supplement its costs - in 2004 Rs. 6.3 million and in 2005 Rs. 12.5 million.

A report on the financial parameters and performance, pertaining to the 20 Plantation companies divested, has been made available in 2005.

This Report reveals that the Divestiture proceeds to the Government from the Main Purchasers and others had been Rs. 7,409 million, of which the Divestiture proceeds from the Main Purchasers had been Rs. 5,408 million. The Main Purchasers had invested into the Plantations Companies a further total of Rs. 2,545 million by way of debentures.

In comparison, the Managing Agency Fees earned from these plantation companies had amounted to Rs. 6,633 million, with dividends to the main purchasers of Rs. 1,212 million, during the above period.

The Main Purchasers of the first six Plantation Companies had paid only Rs. 612 million (Rs. 102 million each) as Purchase Consideration, and had invested in the plantation companies a further total of Rs. 545 million by way of debentures.

As against this, the Managing Agency Fees earned from these six Plantation Companies had amounted to Rs. 1,864 million, with Dividends to these Main Purchasers of Rs. 460 million, during the above period. Overall, the Managing Agency Fees of the Plantation Companies had amounted to 49% of the profit before charging Managing Agency Fees. This percentage varies for the respective Plantation Companies.

The Working Capital of the Plantations Companies has eroded from Rs. (1,562) million to Rs. (3,807) million. Long-term Liabilities had increased from Rs. 6,591 million to Rs. 14,842 million. The total Liabilities had increased from Rs. 10,798 million to Rs. 24,804 million, during the above period.

The Plantation Companies have appealed to the Government for further guarantees to support the borrowing of Rs. 50 million each.

At the point of Divestiture, the Main Purchasers had undertaken to submit a 5-Year Development Plan for the respective Plantation Companies. The Plantation Management Monitoring Division of the Ministry of Plantation Industries had been responsible for monitoring the implementation of this 5-Year Development Plan.

Previously, the Commission had engaged the services of external consultants/advisors, incurring considerable costs of professional fees to carry out Assignments (e.g. Sri Lanka Insurance Company Ltd - US $ 1.75 million (i.e. Rs. 164 million), Cluster Bus Companies Rs. 32.4 million, Ceylon Petroleum Corporation 3rd Player US $ 372,000 (i.e. Rs. 37.5 million, National Insurance Co Ltd UK Pds. 834,000 (i.e. Rs. 136 million).

The above assignments were concurrently processed by the Commission Staff, without engaging services of external consultants or advisors.