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EF The financial status of 12 of the 13 listed companies was analyzed. Of these, four companies, Recope, Incofer, Japdeva and Sinart, recorded losses, while eight companies achieved profits. The National Production Council (CNP), owner of the National Winery (Fanal), was not included in the study because it does not even have audited financial statements, which in itself increases concerns about its financial situation.
While the goal of some of these companies is not necessarily profit, it is important to monitor their financial situation and establish metrics to measure their efficiency and viability. This is especially important for companies that have not generated profits for many years, as more and more taxpayer resources are allocated to maintain a bureaucracy whose programmatic actions do not produce the promised results.
been: How do loss-making state-owned enterprises view their losses?
A clear example is the Atlantic Slope Port Authority and the Economic Development Board (Japdeva), which for years has claimed that it suffered business losses due to the merger’s legal situation after the launch of the Moin container terminal concession.
However, the entity receives a portion of the concession fee, which increases year by year and is much higher than the profit that the institution could have generated historically. Despite this, little is known about the impact of the use of these funds, which by law must be used to improve the competitiveness situation of the Limón province. Its use could even generate new sources of revenue for Japdeva, such as the construction of a new cruise terminal and its respective free port. However, these plans have been shelved.
The second case is Fanal, which, although its recent performance is not clear, has had a tendency in recent years to generate short-lived profits like in 2021, or to incur large losses in the remaining years. In order to promote the sugar cane industry, the State has had a monopoly on the distillation of alcohol and its beverages since 1850. In 1953, this function was transferred to Fanal for the purpose of generating taxes, but also to perform sanitary control over the production of alcohol and to prevent smuggling.
A company with a national monopoly on alcohol production operating at a loss must be a case in point. In 2021, the government hired KPMG Consulting to determine that Fanal (including its brands) was worth close to £41 billion under the monopoly figure. Nevertheless, the value of this company without a monopoly remains in question in a country where the sugar cane industry no longer needs Fanal’s support and can obtain health control and tax revenues related to alcohol sales through other mechanisms, without the need for taxpayers to contribute revenue to cover the losses incurred.
As for the companies that are generating profits, some of them are inflated by the distorting appreciation of the exchange rate, while others, despite their black figures, have lost relevance in the domestic market. This is the case of the Costa Rican Electricity Institute (ICE), which has ceded much of the market to competition in the telecommunications market. In other words, the company has lost value. One of the reasons behind this reality is the lag in rates, since today the institution charges four times more than its competitors in terms of fixed internet.
In short, modern times require that each public company be evaluated on the basis of its ability to achieve the social goals that motivated its creation. If the goal is profit, it must achieve goals higher than what can be achieved through alternative mechanisms such as franchises. What should not be allowed is to maintain these institutions at the cost of higher taxes, because in the end these companies will end up closing instead of selling them when they have a certain market value, as was the case with public banks that were liquidated because their assets were not financially viable.
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