Cape Town - Three ailing state owned entities (SOEs) – Denel, Sanral and Transnet - will receive bailouts to the tune of R30 billion to reduce their risks.
On Wednesday, Finance Minister Enoch Godongwana said the SOEs should be self-sufficient and must contribute to economic growth.
“Unfortunately they face a situation where financial weakness caused in previous years by bad leadership and corruption still needs to be resolved.
“Moreover, when unavoidable events such as the recent floods destroy infrastructure and assets, it puts the whole economy at risk.
“In the meantime, the road network must function, ports must operate and critical technical projects cannot be halted,” he said.
Godongwana also said as balance sheets were being restored and those who looted were being held accountable, there was no choice but to act to keep the SOEs running.
He said additional funding to Denel, Transnet and Sanral would allow the entities to adjust their business models and restore their long-term financial viability.
The minister noted that fiscal support to the SOEs remained a challenging balancing act.
“Funding to SOEs will now come with strict pre- and post-conditions,” he said.
“Pre-conditions mean that SOEs will need to comply with these conditions before they receive government support. Non-compliance means no funding,” he said.
The allocations are as follows:
- R23.7 billion for Sanral to pay off government-guaranteed debt conditional non a solution to phase one of the Gauteng Freeway Improvement Project;
- R5.8 billion for Transnet to repair infrastructure damaged by the recent floods and to increase locomotive capacity; and
- R204.7 million to reduce contingent liabilities arising from its weak financial position and R4.4 billion to complete its turnaround plan.
- He said Transnet was allocated R2.9 billion to ensure the return of out-of-service locomotives.
Godongwana said in-year allocation to Transnet would ensure the return of out-of-service locomotives.
“This will be complemented by R2.9bn form in-year sending adjustment to deal with flood damage that affected its operations in eThekwini.”
He also said Denel was allocated R3.4bn to support recent progress to stabilise the entity.
“This allocation will be augmented by R.8bn in sale for non-core assets and will unlock a committed order book of R12bn awaiting execution.”
The National Treasury said calls for government-guaranteed or funds would continue to be evaluated against the minimum criteria for consideration of request outlined in the 2021 budget.
Cape Times