SL's PPP & SOE Reforms: Ambitious, but Credibility Hinges on Execution 📈

Deloitte partners affirm Sri Lanka's new draft PPP law and SOE restructuring (led by CEB unbundling) are ambitious reforms, crucial for drawing private capital into infrastructure. • Investor Requirements: To attract global funds (pension, sovereign, Middle Eastern capital), projects must be structured at scale, typically requiring a minimum US$ 50-100 Mn ticket size per project. • Core Concern: Exchange rate risk remains a central worry for investors, following the sharp rupee depreciation which eroded dollar returns on long-term assets. Currency stability is key. • Credibility Test: Investor confidence hinges on the quality and execution of the first wave of PPPs—specifically, clear feasibility studies, proper risk allocation, and defined deliverables. • SOE Benchmark: India's reforms show the fiscal upside: ~300 listed SOEs now rival private sector profits and require mandatory dividend payouts of at least 2% of net worth annually. CEB's unbundling is SL's most ambitious SOE initiative. • Priority Sectors: Sectors best suited for PPPs include energy transition, ports, logistics, and user-pay sectors (e.g., renewables, toll roads). • Foundation: Stable macroeconomic conditions, regulatory clarity, and policy consistency are critical for long-term private capital commitment. 🇱🇰