COLOMBO: Sri Lanka on Monday said it will privatise the country's loss-making national carrier as the cash-strapped government "can no longer afford to inject money" into running the airline.
The government is looking to sell a 49 per cent stake each of the SriLankan Airlines' catering and ground-handling units in efforts to restructure the state-run carrier, while 51 per cent will be retained under state hold, Aviation Minister Nimal Siripala de Silva told reporters here.
"This restructuring is essential as the government can no longer afford to inject money into running the airline," he said.
"Annually the government has been providing the airline between USD 80 billion to USD 200 billion to run its operations," de Silva said.
The minister said the revenue from the sale of the catering operation can be used to pay off debt amounting to USD 80 million that was obtained by mortgaging its shares, as well as some other loans.
The airline's debt currently amounts to USD 1.226 billion (LKR 401 billion), he said.
The airline, formed in 1979 as Air Lanka, was rebranded by Srilankan Airlines under the management control of Emirates in 1998.
In 2007, the government took back control of it from the Emirates.
Srilankan Airlines is among over 190 state-owned enterprises that are making huge losses.
Without retaining a 51 per cent stake in the airline, Sri Lanka might lose ownership of the companies to be sold, Economy Next news website quoted minister de Silva as saying.
"But if the investors are Sri Lankan nationals, we can go for more. There are many rich people in Sri Lanka, they can come together as a syndicate or with airlines and offer a bid," he said.
Sri Lankan President Ranil Wickremesinghe has called for much-needed reforms for the loss-making national carrier.
According to Colombo-based think tank Advocata, SriLankanAirlines has, on numerous occasions, required treasury-guaranteed loans to stay afloat, and has amassed over LKR 53.
6 billion in guarantees as of August 2021, the report said.
Sri Lanka, a country of 22 million people, is under the grip of unprecedented economic turmoil, the worst in seven decades.
The crisis that has left millions struggling to buy food, medicine, fuel and other essentials.
The island nation is currently scrambling to chalk out a staff-level agreement with the International Monetary Fund (IMF) for a bailout programme, which could be the antidote for the country's current economic travails.
The country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026.
Sri Lanka's Ministry of Power and Energy has said that 24 companies from 10 countries, including India have evinced interest in selling petroleum products in the crisis-hit country's petroleum sector, according to media reports.
Sri Lanka is in the midst of its worst economic crisis in decades, which is triggered by a severe paucity of foreign exchange reserves.
Sri Lanka's Minister of Power and Energy Kanchana Wijesekera said that 24 companies from the United Arab Emirates, Saudi Arabia, the United States, China, India, Russia, the UK, Malaysia, Norway and the Philippines have submitted proposals for the Expressions of Interest (EOI) to engage in the country's petroleum sector, news portal Colombo Page reported on Sunday.
In July, the Ministry of Power and Energy had called for EOI from established companies in petroleum-producing countries to use their funds for the distribution and selling of petroleum products in Sri Lanka on a long-term basis.
A ministry-appointed panel will now evaluate these proposals, issue Requests for Proposals and finalise the process in six weeks, the report said.
Last month, the Indian Oil Corporation (IOC) said it would expand operations in Sri Lanka by opening 50 fuelling stations and investing in storage tanks and other equipment.
The LIOC, the Sri Lankan arm of the Indian fuel retailer, was the sole entity in the country supplying fuel between late June and mid-July, when the bankrupt country faced extensive protests, forcing the then President Gotabaya Rajapaksa to flee the country as demonstrators stormed the Presidential palace.
The state-owned entity Ceylon Petroleum Corporation ran out of supplies in mid-June, restricting their supplies, and triggering essential services shortages across the debt-ridden country.
Sri Lanka President Ranil Wickremesinghe and a visiting IMF team on Friday held the second round of crucial talks to finalise a bailout package for the cash-strapped country.
The International Monetary Fund (IMF) had made a request for additional information pertaining to electricity tariff revisions and Excise Act and it was decided at Friday's meeting to provide the requested information by next Monday, the President's Office said in a statement.
The first round of talks were held on Wednesday.
It is the second such visit from the IMF in three months.
The visit comes at a time when Sri Lanka is scrambling to chalk out a staff-level agreement with the Washington-based global lender for a USD 5 billion programme, which could be the antidote for the country's current economic travails.
In mid-April, Sri Lanka declared its international debt default due to the forex crisis.
The country owes USD 51 billion in foreign debt, of which USD 28 billion must be paid by 2027.
Prime Minister Dinesh Gunawardena has requested the visiting IMF team to focus on protecting economically vulnerable groups in the debt-ridden island nation which is going through the worst economic crisis.
Sri Lanka, a country of 22 million people, is under the grip of unprecedented economic turmoil, the worst in seven decades.
The crisis that has left millions struggling to buy food, medicine, fuel and other essentials.
The island nation is currently scrambling to chalk out a staff-level agreement with the International Monetary Fund (IMF) for a bailout programme, which could be the antidote for the country's current economic travails.
Prime Minister Gunawardena has requested the IMF to focus on protecting economically vulnerable groups in the country, Colombo Page news portal reported on Sunday.
Prime Minister Gunawardena made this request when the visiting IMF team met him and held discussions at the Prime Minister's Office.
The Prime Minister apprised the IMF team of the economic challenges in the country and the measures taken by the government to reduce the difficulties faced by low-income earners.
The country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026.
He explained the measures taken by the government to reduce non-essential imports and increase export products and the measures taken by the government to increase welfare for the poorest sections of the society.
Peter Breuer, Head of the IMF's Negotiation Panel said that his team will discuss with the government, the opposition and other parties and report the facts to the headquarters in Washington.
The IMF representatives also explained the facts about taking protective measures for vulnerable groups in preparing plans for debt restructuring and economic revival.
Dr Masahiro Nozaki, Head of Mission of the IMF, has agreed that taking protective measures for economically vulnerable groups is an essential requirement when preparing plans for debt restructuring and economic revival, as pointed out by the Prime Minister.
An IMF team met Sri Lanka's President Ranil Wickremesinghe on Wednesday for talks on a bailout package.
Debt restructuring is a prerequisite for the IMF facility.