Impact Study on Infrastructure Privatization in Sri Lanka

This project was commissioned to S.J. Associates, representing Arthur Andersen in Sri Lanka, with IPS being selected to form part of the consultancy team for the study. The main objective of the study was to evaluate the impact of infrastructure privatization in Sri Lanka over the last decade from the perspective of different stakeholders such as owners/investors, the government, employees, consumers and industry competitors. The study focused on Sri Lanka Telecom, Sri Lankan Airlines, Shell Gas Lanka, and the Sri Lanka Ports Authority; capital intensive manufacturing enterprises such as Ceylon Steel Corporation, Rajarata Agro Fertilizer and Puttalam Salt; and the electricity sector. Key Findings – Whilst there were differences in the results obtained for the various entities, the overall findings of the report were that privatization had contributed significantly to the government’s fiscal position, improved the financial and productivity performance of the firms, and benefited most stakeholders. A significant weakness of the privatization program, highlighted in these case studies, was that the regulatory structures for utility privatization were less than satisfactory and prevented the realization of greater efficiency and distributional gains.