The biggest challenge the government faces in reducing the amount of capital allocated to government-owned companies is that most companies are essential service providers, the Parliament's Finance Committee, MP Mohamed Nashiz, has said.
The state issues capital to start some companies, provide cash flow and expand their businesses.
Replying to a question from AVAS, Kinbidhoo MP Nashiz said although the government wants to reduce the number of funds allocated to SOEs, there are many challenges in achieving the goal.
"It is difficult for companies established to provide essential services to run on profit due to some decisions the government has to take to control the market rates," Nashiz said.
Nashiz said that he had given many recommendations to the government to overcome such difficulties faced by companies. He added that although reducing the amount of capital allowed to companies is difficult, it is essential that the step is taken. He said this could only be achieved by strengthening companies' management and reducing costs.
"We need to restructure and minimize the amount of capital the state gives to companies," he said.
Noting that companies like MPL, MACL, and BML make huge profits, Nashiz said the greatest difficulty for essential service providers directly connected to the people is that essential services must be provided at specific prices.
