FINANCE Minister Nhlanhla Nene says the government lacks the legal instruments to properly intervene in the affairs of state-owned companies when things go awry, and that it is exploring legislative changes to enable it to do so.
Several state-owned enterprises are in financial distress, among them South African Airways (SAA) and the South African Post Office. Although SAA was placed under the charge of the Treasury in December last year, the airline has not stabilised and was unable to finalise its financial statements at the end of September.
At a briefing in Parliament on Wednesday Mr Nene said while provisions existed to place provinces or municipalities under administration, “we do not have the required legislation that would allow us to take charge of state-owned enterprises in distress”.
While state-owned companies are also governed by the Companies Act, it appears that the government does not consider the remedies it provides — such as business rescue — appropriate.
Despite being taken over by the Treasury, SAA has again requested a government guarantee in order to remain a going concern. The airline already has R14.5bn in guarantees. The Treasury responded to the request by insisting that certain matters were clarified first.
Treasury official Avril Halstead said that among these was the finalisation of the negotiations regarding the leasing of new aircraft. SAA has a contract with Airbus to lease 20 A320s from Airbus. A proposal to renegotiate this to include 10 A320s (narrow body aircraft) and 10 A330s (wide body aircraft) has been accepted by the Treasury.
However, Ms Halstead said SAA chairwoman Dudu Myeni had written to the Treasury recently, suggesting a new leasing arrangement. “This will have a material impact and needs to be finalised first,” said Ms Halstead.
In his medium-term budget policy statement, Mr Nene held the line he introduced a year ago, repeating that any new funding for state-owned enterprises would be deficit neutral.
Deputy President Cyril Ramaphosa heads an interministerial committee charged with examining future options for state-owned enterprises.
The committee, which is likely to provide a report to the Cabinet at its January lekgotla, is looking both at governance and shareholder models, which will include a framework for private participation.
While the government has been cool on privatisation for the past 15 years or so, the ground appears to be shifting.
The African National Congress at its national general council earlier this month said it supported the selling of equity stakes in old Eskom power stations to the private sector. Mr Ramaphosa and Public Enterprises Minister Lynne Brown have both spoken approvingly of the Chinese model, in which large state-owned companies have listed part of their equity to raise capital.