Sri Lanka's PPP, SOE reforms ambitious and transformative - Deloitte

SRI Lanka's draft law on public-private partnerships (PPPs) and the restructuring of state-owned enterprises (SOEs), led by the unbundling of the Ceylon Electricity Board (CEB), represent ambitious reforms that could transform the role of private capital in infrastructure and capital projects sector, Deloitte partners said in Colombo.

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However, they cautioned that credibility with investors will depend on stable macroeconomic conditions, regulatory clarity, and the quality of preparation of early projects.

Deloitte Sri Lanka and Maldives Head of Strategy, Risk and Transactions Advisory Services Ruvini Fernando said the proposed PPP law gives a permanence and stability that had been missing. “Sri Lanka has attempted PPPs before, some successfully and some not. But now that we have a law, it will be more formalised and become part of the national policy framework,” she said.

She argued that private capital is necessary given fiscal limits. “PPPs are one way of crowding in private investment. Capital markets are another avenue, and foreign direct investment should supplement what is available domestically. Public finances must focus on essential services such as education and health, so capital expenditure for infrastructure will increasingly depend on private participation,” Fernando said.

Deloitte Sri Lanka and Maldives Commercial DD, Valuation and Modelling Leader Lasanga Abeysuriya said the first projects launched under the law will shape investor sentiment. “If projects are prepared with clear feasibility studies, proper risk allocation, and defined deliverables, that will attract serious investors. Execution of the first wave is crucial for credibility,” he said.

Deloitte India Partner - Strategy, Risk and Transactions and National Leader - Infrastructure and Capital Projects Head - Restructuring, Financial and Strategic Solutions Manish Aggarwal underlined that transparency, structural reforms, and policy stability form the foundation of investor confidence. “Private capital is long-term. Investors want clarity that the policy framework is stable, that the reforms are not one-off, and that governance is improving,” he said.