Gov’t Halts STO’s Acquisition of FENAKA Corporation
The planned acquisition of FENAKA Corporation by the State Trading Organisation (STO) has been suspended following a directive from the Ministry of Finance.
President Dr Mohamed Muizzu had announced on 25 August that FENAKA would be made a subsidiary of STO by transferring its shares to the state-owned trading entity. The proposal was presented as part of efforts to reform the utility sector, enhance service efficiency, and strengthen FENAKA’s operations.
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In a statement issued on Wednesday, STO confirmed its decision to discontinue the acquisition process in compliance with the Finance Ministry’s directive. The organisation added that after reviewing the progress made on conditions outlined in the acquisition proposal, the STO Board of Directors resolved to halt all activities related to the share transfer.
Announcement 📢
STO has decided to discontinue the acquisition of shares in @TeamFenaka, following the directive issued by the @MoFmv on November 24, 2024.
For more details: https://t.co/MqZZLvQgmN— STO (@stoplc) November 28, 2024
A submission by the Finance Ministry to the cabinet highlighted that the acquisition would have granted STO the authority to determine FENAKA’s workforce size. According to the President’s Office, this measure aimed to streamline operations and improve service delivery in the utility sector.
FENAKA, a state-owned utility service provider, has faced persistent allegations of corruption. Accusations include irregularities in contract awards and recruitment practices, with several cases lodged with the Anti-Corruption Commission (ACC). The corporation has also been accused of hiring employees before elections, only to terminate them afterwards.
Despite its challenges, FENAKA has reported recent financial improvements. Managing Director Muaz Mohamed Rasheed revealed that the company’s losses of MVR 24.7 million in the final quarter of 2023 had been turned into a profit of MVR 7.4 million by the second quarter of 2024. He further expressed confidence in achieving an annual profit of MVR 25 million by the end of the year.
The suspension of the acquisition marks a significant development in efforts to reform the utility sector while addressing concerns surrounding FENAKA’s operations.
