One-third of Sri Lanka’s SOEs record losses in first half of 2025

Colombo, Nov. 14 (Daily Mirror) - Sri Lanka’s state-owned enterprise (SOE) sector is once again under scrutiny as new fiscal data reveals persistent structural weaknesses, with nearly one-third of major state entities running losses in the first half of 2025. The Mid-Year Fiscal Report released by the Ministry of Finance paints the picture of a sector struggling under years of mismanagement, political interference and mounting liabilities—despite repeated restructuring efforts.

While 52 key SOEs collectively generated a profit of Rs. 280.7 billion in the first six months of 2024, this year’s figure has slipped dramatically to Rs. 227.8 billion. The drop highlights not only weakened financial performance but also the inability of several large institutions to respond to operational and market pressures.

At the centre of these concerns are the Ceylon Electricity Board (CEB), SriLankan Airlines and Lanka Sugar Company—entities long plagued by governance lapses. The CEB, once delivering strong surpluses, has swung back into the red with a pre-tax loss of Rs. 13.2 billion by June 2025. This comes after recording profits of Rs. 144 billion in 2024 and Rs. 57.6 billion in 2023, raising questions about the sustainability of its revenue model and cost controls.

SriLankan Airlines continues to be one of the heaviest burdens on the Treasury. The national carrier posted a pre-tax loss of Rs. 12 billion from April to June alone, pushing cumulative losses to Rs. 628 billion and deepening its negative equity to Rs. 415 billion. Its debt obligations now exceed Rs. 606 billion. 

Lanka Sugar Company, another chronically distressed institution, widened its losses to Rs. 2.6 billion in the first half of 2025, reversing a profit recorded just two years earlier.

These trends have renewed debate over the role of political influence and weak institutional discipline in crippling public enterprises. Presenting the 2026 Budget, President Anura Kumara Dissanayake delivered an unusually blunt assessment, stating that years of politically driven recruitment, undisciplined borrowing and unclear mandates had turned many SOEs into fiscal liabilities. Several institutions, he said, cannot even meet basic obligations such as bank repayments, tax dues or employee EPF/ETF contributions—necessitating Treasury intervention amounting to Rs. 11 billion this year alone.

To arrest further deterioration, the government plans to shut down entities lacking clear administrative or commercial relevance, consolidate agencies with overlapping functions and overhaul organisations that have deviated from their founding purpose. Thirty-three inactive institutions are already earmarked for closure by 2026.

As of 30 June 2025, loss-making institutions include major utilities, media bodies and plantation agencies such as:

• Ceylon Electricity Board
• SriLankan Airlines
• Lanka Sugar Company
• State Engineering Corporation
• Lanka Sathosa
• State Development and Construction Corporation
• Hotel Developers (Lanka)
• Sri Lanka Rupavahini Corporation
• State Timber Corporation
• Independent Television Network
• Sri Lanka Broadcasting Corporation
• State Printing Corporation
• Ceylon Fisheries Harbour Corporation
• National Livestock Development Board
• Janatha Estate Development Board
• Sri Lanka State Plantation Corporation
• Sri Lanka Cashew Corporation
• Ceylon Fisheries Corporation

Several institutions also require Treasury support as they have defaulted on EPF/ETF obligations and tax payments, including Lanka Sugar Private Ltd, the Janatha Estate Development Board, Sri Lanka State Plantation Corporation, the Rupavahini Corporation, Elkaduwa Plantations Ltd and North Sea Ltd.

However, the report does note pockets of resilience. State banks have posted a combined increase of Rs. 65.5 billion in profitability, while the Sri Lanka Ports Authority, National Water Supply and Drainage Board and the Employees’ Trust Fund Board have reported improved financial performance—offering some balance to an otherwise challenging landscape.

With the government pushing ahead with restructuring and consolidation, the coming year will be pivotal in determining whether Sri Lanka’s long-troubled SOE sector can finally break from cycles of political interference and chronic losses, or whether it will remain a persistent fiscal drag on the nation’s recovery.