Public companies closed with profits for the second year

Ecuadornews:

In the consolidation of its balance sheets, public companies closed 2018 with USD 828 million in profits. This is the second year in a row that, in the overall result, entities record revenues greater than their expenses; that is, they have a surplus. In 2015 and 2016 they had registered losses of more than USD 1,400 million, according to data from the Central Bank of Ecuador

In April of last year, the Government recognized that several public companies generated problems and announced a plan for the optimization and elimination of some of these entities, as well as the restructuring and merger of ministries and secretariats.

Although the global balance generates positive figures, not all companies generated surpluses. This newspaper consulted last Monday to the Coordinating Company of Public Companies (Emco) the detail of which of the companies had losses, and on the goals reached with the plan.

The entity said that the information is being processed. However, the data of the accountability of the Emco in 2018 show that the Treasury received that year USD 216 million in surplus from four public companies: CNT, Celec, Empresa Cementera and Astinave. The data of the Central Bank of Ecuador accounts that the income of the state grew between 2017 and 2018, mainly, those generated by the activity of each company. Meanwhile, the resources assigned by the State in 2018 were reduced in relation to 2017.

The Organization for Economic Cooperation and Development (OECD), to which Ecuador is seeking to join, recommends that state enterprises be autonomous from governments in aspects such as financing.

Edisson Garzón, former president of the Emco, believes that the optimization plan aimed at companies to reduce excesses and change their vision to be less dependent on the State. “The intention was that companies were not a burden on the State budget, but to provide resources that have a vision of a private company,” he said.

For Alberto Acosta Burneo, economist of Análisis Semanal, the surplus is the result of external factors such as the increase in oil prices. The years in which the entities had the largest losses coincide with the years in which the price of crude oil fell further. “With a higher price on crude oil, Petroecuador and Petroamazonas sold more and improved their revenues, but we do not see that the rest of the companies have had major changes in their operations,” added Acosta Burneo.

In 2017, the price of WTI crude, which serves as a reference for the price of Ecuadorian oil was USD 50.91, and in 2018, USD 64.90. The two oil companies began a merger process last week.

In their accountability reports last year, the two oil companies report higher profits compared to 2017. Petroecuador notes that another factor that influenced the results was the increase in revenues from internal sales of derivatives. Expenses of public companies did not decrease between 2017 and 2018, as foreseen in the optimization plan.

They spent more on the purchase of goods and services, and although one of the main objectives of the plan was to cut staff, the payment of salaries also grew. This item went from USD 415 million in 2017 to 420 million last year. At the beginning of this year, the Government ordered that companies reduce 10% of the staff.

The airline Tame said it saved USD 4.7 million with the elimination of vacancies in the last year. While in the CNT, the adjustment of the payroll, the renegotiation with suppliers and other optimization actions generated a saving of USD 3.5 million in 2018. (I)

Source: https://www.elcomercio.com/actualidad/empresas-publicas-ganancias-superavit-balances.html