STO and FENAKA acquisition discontinued

State Trading Company (STO) has discontinued efforts to acquire State Electric Company (STELCO) to make it a subsidiary of STO.

STO said the decision was made in compliance with an order from the Finance Ministry, received on 24th November. The company said that the decision, which was finalised in a board meeting held today, also referred to the progress of the tasks included in the acquisition proposal submitted to the government previously.

Last August, the government decided to have STO operate as the parent company of FENAKA.

However, the government's budget for the upcoming year includes another potential solution - one that involves merging FENAKA and STO instead of STO acquiring FENAKA. A final decision and a permanent solution will be determined next year Finance Ministry said.

At present, one company that owes the largest amount of debt to STO is FENAKA. This figure reaches MVR two billion after purchasing fuel for the utility company.

FENAKA's total debt, including that owed to STO, is at MVR 4.1 billion as of now, making it one of the state owned enterprises that has the most mismatched expenditure to revenue ratios.

The company also has the most employees with more than 7,000 staff on board. It is estimated at about 13 percent of the company's revenue goes towards salaries. This figure was MVR 72 million last year.