Inside Sri Lanka’s State-Owned Enterprise Crisis: Profitability, Losses, and Fiscal Reality

State-Owned Enterprises (SOEs) occupy a colossal footprint in Sri Lanka’s economic landscape, holding total assets valued at roughly Rs. 16.5 trillion, accounting for nearly 50% of the nation's GDP. 

While official registries estimate that there are around 527 state entities in total, encompassing various statutory boards, corporations, and fully owned companies, the Ministry of Finance actively monitors, reviews, and publishes detailed financial performance data for 51 to 52 strategic key SOEs.

The financial year 2025 painted a challenging picture for the state enterprise sector, marked by fluctuating utility tariffs, structural debt burdens, and contrasting performances between commercial monopolies, state-backed financial institutions, and competitive commercial entities.

Profit-Making SOEs: Performance & YOY Comparison

Among the key monitored strategic enterprises, the vast majority operate with net positive bottom lines, heavily anchored in the banking, financial, and ports sectors. However, true independent profitability without state patronage or systemic monopolies remains rare.

• Number of Profitable SOEs: Out of the 51 key reporting enterprises, approximately 33 to 34 entities registered profits, though a significant portion of these earnings derived from state banking dominance, regulatory protections, or captive public funds.
• Total Profit (Financial Year 2025): The combined pre-tax profit of the strategic SOE sector dropped to Rs. 444.4 billion in 2025.

·         Year-on-Year (YOY) Comparison: This represents a 17.6% decline compared to the previous financial year (2024), where the main strategic SOEs posted a combined profit of Rs. 539 billion (or Rs. 539.9 billion depending on final treasury adjustments).

• Excluding the Power Sector Volatility: Interestingly, if the heavy swings of the Ceylon Electricity Board (CEB) are isolated, the remaining 50 profitable and baseline SOEs actually grew their aggregate profits by 21.5%, rising from Rs. 397.7 billion to Rs. 483.2 billion, largely aided by strong performances from state banks like the Bank of Ceylon (BOC) and People's Bank.
• Net Treasury Transfer Reality: Despite headline profits of Rs. 444.4 billion, the state sector remained a net drain. The Treasury collected only Rs. 56.5 billion in dividends and levies in 2025 (up from Rs. 41.1 billion in 2024), while simultaneously disbursing roughly Rs. 103 billion to Rs. 104 billion in budgetary support, recapitalisation, and maintenance.

Loss-Making SOEs: Performance & YOY Comparison

Entities facing direct market competition or heavy debt-servicing obligations continue to struggle immensely, heavily eroding public finances and requiring continuous fiscal life support.

• Number of Loss-Making SOEs: According to the Ministry of Finance Mid-Year and Final Fiscal Reports, 18 key SOEs out of the monitored basket operated firmly in the red during fiscal tracking periods.
• Total Losses & Major Culprits (Financial Year 2025): Total sector-wide losses and deficits accumulated heavily within structural entities, led by a sharp reversal of fortune for the Ceylon Electricity Board (CEB), which swung from a massive profit in 2024 to a net loss of Rs. 38.7 billion in 2025 following cumulative end-user electricity tariff reductions.
• Other Major Deficits: SriLankan Airlines continued its deep insolvency spiral, widening its net loss before tax to Rs. 23.2 billion (with cumulative liabilities soaring past Rs. 600 billion and negative equity). Other chronic loss-makers included the Lanka Sugar Company, State Engineering Corporation, Lanka Sathosa, and several state-run media institutions (such as the Rupavahini Corporation and ITN) which struggled to cover operational overheads and honor EPF/ETF statutory contributions.
• Year-on-Year (YOY) Comparison: The aggregate loss profile across the vulnerable segment intensified severely due to the CEB's transition from a net positive contributor to a major deficit-holder. While minor loss adjustments fluctuated across entities, total sector leakage absorbed by the Treasury and state banks climbed past Rs. 69 billion in direct unrecovered liabilities, forcing the government to fast-track liquidation plans for 33 non-functional state entities and push forward structural unbundling under IMF-backed governance frameworks.

Employment Landscape in State Enterprises

While precise aggregate census data spanning all 527 registered statutory bodies fluctuates due to ongoing voluntary retirement schemes (VRS), recruitment freezes, and institutional closures, the total workforce embedded across Sri Lanka's state enterprise ecosystem is estimated at over 200,000 to 250,000 employees.

The vast majority of these public-sector jobs are concentrated within mega-infrastructure and utility providers like the CEB, Sri Lanka Ports Authority (SLPA), Ceylon Petroleum Corporation (CPC), SriLankan Airlines, and regional plantation management boards, many of which face structural overstaffing and productivity challenges that current public enterprise reforms aim to mitigate.

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