Cape Town - THREE flailing state-owned enterprises will receive massive bailouts from government, Minister of Finance Enoch Godongwana said in his second mini-budget on Wednesday.
This includes the national railway company Transnet, the South African National Roads Agency (Sanral) and arms manufacturer Denel.
"Denel is allocated funding to pay off government-guaranteed debt and complete its turnaround plan, making it a viable entity," said Godongwana in his policy statement.
"Sanral receives funds to pay off government-guaranteed debt, conditional on a solution to phase 1 of the Gauteng Freeway Improvement Project, and Transnet receives funds to repair infrastructure severely damaged by the April floods and increase locomotive capacity, both of which will support economic growth."
Sanral will receive R23.7 billion, Transnet R5.8bn and Denel R3.4bn.
Half of the funds allocated to Transnet are to repair infrastructure damaged by the recent floods and half to increase locomotive capacity.
Transnet recently entered into a three-year wage agreement with striking workers for a 6% salary increase for the current financial year, a 5.5% raise next year and a further 6% hike in 2024.
The bailout to Denel is to reduce contingent liabilities arising from its "weak financial position".
“Unfortunately, we face a situation where financial weakness caused in previous years by bad leadership and corruption still needs to be resolved,” Godongwana said.
“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 added: “So, as balance sheets are being restored and those who looted and mismanaged them are being held accountable, including through the criminal justice system, we have little choice but to act to keep these key services running.”