State-Owned Enterprises (SOEs) are grappling with substantial debt burdens during the current administration, according to information presented by transitional spokesperson Mohamed Firzul.
Fenaka Corporation, has been particularly spotlighted for its financial struggles, with a debt of MVR 4.1 billion recorded at the end of the previous year. This debt includes MVR 3.2 billion owed to suppliers, with 1,149 suppliers awaiting payment, and MVR 958 million that has been outstanding for over a year. Additionally, the company has taken out loans amounting to MVR 901 million.
Fenaka’s financial records for the previous year had not undergone an audit, and the financial plan for the current year remains unprepared. The company has also been hesitant to disclose a list of outstanding vendors. As a significant portion of the state budget—around half a billion rufiyaa—is allocated to Fenaka each year, its budget for 2022 was approved with a deficit of MVR 1.6 billion. The 2023 budget continues to feature a deficit of MVR 960 million, lacking details regarding debt financing.
Furthermore, the Male Water and Sewerage Company (MWSC) and Waste Management Corporation Limited (WAMCO) are grappling with extensive debts. MWSC’s total debt amounts to MVR 1.4 billion, encompassing MVR 137 million owed to suppliers, MVR 822 million owed to creditors, and MVR 493 million in loans. Thirteen out of 28 projects have been completed, and the company’s financial situation has been adversely affected due to the government’s outstanding payments from these projects.
The debt of WAMCO stands at MVR 226 million, coupled with an absence of a business development plan and financial audits incomplete since 2020. Additionally, improper inventory management has led to inefficiencies.
STELCO, for instance, reported a total debt of MVR 3.7 billion, presenting financial challenges to meet upcoming debt obligations due to a scarcity of dollars and poor cash flow, which, in turn, may affect the company’s ability to cater to peak power usage demands.
The transitional government has proposed several strategies to rectify these financial issues, such as bolstering financial and administrative management, expediting payments to small businesses, and reevaluating the utility system’s structure. The newly elected government is faced with a challenging financial landscape and mounting debts within many SOEs.