COLOMBO, 4 November 2026: The Dissanayake administration is winding up dormant public enterprises and reviewing further closures, confronting the tension between its political history and the demands of economic governance.
President Anura Kumara Dissanayake’s National People’s Power Government is proceeding with the liquidation of non-operational state-owned enterprises, marking a significant shift in the administration’s approach to a public sector it once vigorously defended against privatisation and restructuring.
The programme follows Cabinet approval granted in September 2025 for the closure of 33 non-functioning state enterprises. A specialised unit established under the Ministry of Finance in March 2026 is overseeing the process.
The Government argues that institutions which no longer provide meaningful public services or economic benefits should not continue to impose unnecessary costs on the Treasury.
That position is economically defensible. Politically, however, it invites scrutiny of the NPP’s earlier opposition to state-sector restructuring and the standards by which the administration now distinguishes necessary reform from the disposal of public assets.
From Opposition Politics to the Responsibilities of Government
For years, the political movement now leading the Government opposed proposals associated with privatisation, the sale of state assets and restructuring under previous administrations.
Its criticism frequently centred on the protection of national resources, public ownership and employment security.
The challenge of governing has introduced different pressures.
Inactive institutions can continue to create financial and administrative obligations even when they no longer perform the functions for which they were established.
Maintaining such entities indefinitely may divert public resources from essential services and economically productive investments.
The Government’s willingness to proceed with liquidation therefore reflects a pragmatic approach to dormant enterprises. It also places its previous political messaging under examination.
Yet the distinction matters: closing an inactive company does not necessarily mean privatising its assets or transferring public services to private ownership.
The present programme should be assessed on its actual legal and economic effects rather than treated as equivalent to every restructuring proposal the NPP previously opposed.
Mihin Lanka and Other Dormant Enterprises
Among the institutions identified for liquidation are Mihin Lanka, Selendiva Investments, Lanka Cement and several entities established for projects that were subsequently abandoned or became inactive.
The original list also included companies associated with the Hambantota Commonwealth Games bid, Asian Games projects, Lanka Logistics, Magampura management operations, technology development and transport-related activities.
Mihin Lanka remains one of Sri Lanka’s most recognisable examples of a troubled state-sponsored commercial venture.
Established as a budget airline, the company accumulated substantial losses and liabilities before ceasing operations.
Its history has become a warning about the consequences of weak financial controls, political influence and inadequate commercial oversight in state enterprise management.
The inclusion of Mihin Lanka and other inactive entities in the liquidation programme raises an obvious question: why should the Treasury continue maintaining corporate structures that have ceased to serve a viable public purpose?
Missing Records and Legal Obstacles Complicate Closures
The liquidation programme has encountered significant administrative and legal difficulties.
A Finance Ministry official cited in published reporting said that a company identified as Natural Resources had been wound up, while 18 entities had been removed from the immediate liquidation list because of complications including litigation, registration issues or earlier removal from company records.
This reportedly left 16 institutions requiring further action.
Some companies also face difficulties arising from incomplete financial documentation and longstanding administrative irregularities.
These problems demonstrate that liquidation is not simply a matter of issuing a closure order.
Authorities must establish the legal status of each entity, identify outstanding debts and obligations, resolve ownership and registration questions and ensure that remaining assets are handled transparently.
Where financial records are missing, the responsibility to account for public resources becomes particularly important.
The Government must therefore explain not only which companies will close but also how liabilities, assets and unresolved legal matters will be addressed.
Rs. 5 Billion Allocated to Settle Employee Liabilities
The reforms also involve substantial obligations to former and current employees.
According to the Finance Ministry’s reported figures, the Treasury allocated Rs. 5 billion in the 2026 Budget to settle longstanding Employees’ Provident Fund contributions, Employees’ Trust Fund obligations and gratuity liabilities associated with selected state enterprises.
Of that allocation, Rs. 2.8 billion had reportedly been disbursed by the end of August 2026.
These payments are an essential component of any responsible closure programme.
Employees should not bear the financial consequences of failed enterprises through unpaid statutory benefits or retirement entitlements.
The Government must demonstrate that the liquidation process protects lawful employee claims and that the remaining allocated funds are distributed through transparent procedures.
The need to settle these liabilities also underlines the long-term cost of allowing inactive public enterprises to remain unresolved.
51 Major Enterprises Record Rs. 259.3 Billion Profit
While dormant entities are being wound up, financial results from major active state enterprises present a different picture.
The Ministry of Finance reported that 51 major state-owned enterprises recorded combined profits of Rs. 259.3 billion during the first six months of 2026.
That compares with Rs. 227.8 billion during the corresponding period of 2025, representing an increase of Rs. 31.5 billion.
The improvement occurred despite higher operating costs and economic pressures linked to instability in the Middle East and disruptions to international transport and supply chains.
However, the aggregate figure should not be interpreted as evidence that every state enterprise is financially healthy.
Profits at major institutions can offset losses elsewhere, while subsidies and differences in accounting treatment can affect the overall picture.
A meaningful assessment requires enterprise-level results, including financing costs, liabilities, Treasury support and the sustainability of operating earnings.
The contrasting performance of active and inactive entities reinforces the case for evaluating each organisation according to its economic purpose and financial condition.
A New Framework for State Enterprise Governance
Alongside liquidation, the Government is pursuing broader changes to the management of public commercial enterprises.
Proposals under discussion include legislation intended to strengthen financial accountability, corporate governance and management standards.
Plans for a holding-company structure have also featured in the reform debate, potentially allowing selected state businesses to be managed under a more coordinated ownership and oversight framework.
These proposals should be judged by whether they improve transparency, reduce political interference and create clear accountability for commercial performance.
A holding company alone cannot guarantee efficient management.
Its success would depend on independent oversight, credible board appointments, audited financial reporting and safeguards against the continuation of political influence through a different administrative structure.
President Identifies 34 Institutions for Review
Speaking at the centenary annual conference of the Government Surveyors’ Association in Battaramulla on 23 October, President Dissanayake said the Ministry of Finance had appointed a committee to consider the closure or amalgamation of 34 institutions regarded as unnecessary or inefficient.
The announcement signals that the Government intends to extend its examination of public-sector structures beyond the immediate liquidation of dormant enterprises.
However, the authorities should clarify the relationship between the institutions covered by the September 2025 Cabinet decision and the 34 institutions identified by the President.
Without a published and reconciled list, it would be premature to assume that the figures represent entirely separate groups of organisations.
Public disclosure would also allow employees, creditors and taxpayers to understand the rationale for each proposed decision.
A Policy Shift That Demands an Explanation
The strongest criticism of the Government is not that it has decided to close non-functioning institutions.
Such closures may be necessary to prevent further waste and resolve liabilities inherited from previous administrations.
The more consequential question is whether the NPP has adequately explained how its present approach differs from the restructuring policies it once condemned.
Opposition to indiscriminate privatisation can coexist with support for closing dormant enterprises. Public ownership can also coexist with commercial discipline and independent management.
What matters is whether the Government has developed a consistent policy framework or is responding to financial realities through decisions it previously rejected in principle.
The administration now has an opportunity to establish that distinction clearly.
Publishing the full liquidation list, the status of each institution, the treatment of employees and the expected financial consequences would make the reforms easier to evaluate.
Sri Lanka’s long experience with poorly governed public enterprises shows why reform cannot rest on slogans alone.
For the Dissanayake Government, the real test is whether it can preserve legitimate public interests while acknowledging that some institutions have ceased to justify their continued existence.
