Fenaka Corporation, the state-owned utility company responsible for providing electricity and water across the Maldives, is currently grappling with significant financial difficulties. The company’s Managing Director, Muaz Mohamed Rasheed, revealed that Fenaka is facing an alarming MVR 86 million shortfall above its monthly revenue, leading to challenges in paying employee salaries for both the past and current months.
The Financial Gap
Muaz explained that Fenaka requires MVR 299 million monthly to cover its operational costs, but it is only generating about MVR 213 million in revenue. This means the company is falling short by over MVR 86 million each month. This financial gap has put the company in a precarious position, struggling to cover essential expenses, including the salaries of its employees.
Rising Costs and Debt Burden
The largest expense for Fenaka is its fuel costs, which amount to MVR 98 million per month. In addition to this, the company must allocate MVR 79 million for employee salaries, which constitutes 35 percent of the total revenue. Fenaka also faces monthly payments of MVR 30 million towards loans, MVR 10.5 million for an out-of-court settlement, and MVR 17 million in administrative costs.
Muaz emphasized that the company’s financial woes have been compounded by unpaid bills and unrecorded work across various islands, with the total debt exceeding MVR 4.3 billion since the current administration took charge.
Possible Layoffs and Call for Government Intervention
With no immediate solution in sight, Muaz warned that if Fenaka does not secure an additional MVR 86 million, approximately 2,000 employees could face layoffs. He stated that layoffs should be avoided at all costs, urging the government or the Ministry of Finance to step in with financial support to help stabilize the company’s operations.
Measures to Address Financial Strain
In an attempt to alleviate its financial pressure, Fenaka has proposed several measures. One of the key strategies is to increase the government subsidy for its sewerage services, which currently amounts to MVR 11 million, while the actual cost to the company is MVR 35 million per month. Fenaka has also requested the Ministry of Finance to defer loan payments, including outstanding amounts from previous loans taken in 2014, as well as loans from 2023.
Additionally, Fenaka has reached out to the Maldives Islamic Bank to restructure a MVR 400 million loan and is seeking assistance in recovering MVR 350 million owed by government agencies.
While Fenaka has made efforts to reduce operating expenses, saving MVR 160 million in administrative costs as of October 2024, Muaz admitted that cutting costs alone will not be enough to resolve the financial crisis. He stressed that immediate government intervention is crucial to ensure the company’s financial stability and continued operation.
As the situation stands, Fenaka's future hangs in the balance, and the company is urgently seeking support to avoid layoffs and ensure that it can continue providing essential services to the people of the Maldives.
