Sri Lanka’s Troubling State Enterprises: A Fiscal Drain
Sri Lanka is grappling with a staggering waste of public resources, largely due to bureaucratic inefficiencies that allow defunct state enterprises to persist without resolution. According to a new report from the Auditor General, millions of rupees continue to bleed from the nation’s finances as several dormant institutions remain caught in bureaucratic limbo.
Actual Numbers Paint a Grim Picture
Despite a Cabinet directive from September 2025 mandating the Ministry of Industry and Entrepreneurship Development to appoint liquidators for inactive state-owned enterprises, little progress has been made. By May 2026, eight such entities, including the Sri Lanka Cement Corporation and Lanka Cement PLC, remain inactive yet financially draining.
High Costs of Inaction
One glaring example is Kantale Sugar Industries Limited, where operational activities ceased in 1994, yet 32 employees—all beyond mandatory retirement age—stay on the payroll. This results in a monthly expense of around Rs. 1.7 million, which covers salaries and operational costs for a facility that contributes nothing to the economy. It raises pressing questions not only about fiscal prudence but also about moral responsibility towards taxpayers.
Wider Governance Failures
Further exacerbating the situation, the Auditor General’s report highlights significant accountability lapses among the remaining inactive units. Both Lanka Cement PLC and Hingurana Sugar Industries Company Limited have failed to provide crucial information regarding the status of their annual reports, leaving their financial conditions unexamined and liabilities unchecked.
Systemic Issues Persist
Beyond individual entities, there is a disconcerting trend of delays. The governance failures within the Ministry have been stark, with a climb in the number of statutory institutions failing to submit their annual reports: 9 in 2022, 14 in 2023, and a startling 24 in 2024.
Unaddressed Liabilities and Prime Land Loss
The prolonged inaction not only hampers economic efficiency but also locks up vital land resources and infrastructure. The National Audit Office has issued urgent calls for the Ministry to collaborate with the Department of Public Enterprises and Treasury to appoint liquidators and finally dissolve these financial black holes.
Call to Action
The time for action is now. The Auditor General’s recommendations cannot be ignored any longer. As Sri Lanka navigates its economic recovery, shedding these non-viable entities will be crucial in stopping the financial drain and unlocking state value for productive use. This is a pivotal moment for policymakers to take decisive steps toward fiscal accountability and governance reform.