https://www.engineeringnews.co.za
Africa|Business|Defence|Denel|Financial|Projects|Resources|Sustainable|Equipment|Operations
Africa|Business|Defence|Denel|Financial|Projects|Resources|Sustainable|Equipment|Operations
africa|business|defence|denel|financial|projects|resources|sustainable|equipment|operations

Minister reiterates ‘tough love’ approach to SOE fiscal dependence

An SAA aircraft

Photo by Creamer Media

23rd February 2022

By: Marleny Arnoldi

Deputy Editor Online

     

Font size: - +

Finance Minister Enoch Godongwana has reiterated his commitment to clamp down on State-owned entities (SOEs) that are draining the fiscus with bailouts.

Delivering his Budget 2022 speech on February 23, he pointed out that more than R308-billion had been directed towards bailing out failing SOEs.

In 2020/21, SOEs made limited progress in their reforms and most of the companies deferred their capital investment projects for the time being.

The Minister noted that government would reduce the continual demands on South Africa’s limited public resources from SOEs and rather nudge them to develop and implement sustainable turnaround plans.

“The future of SOEs is under consideration by the Presidential SOE Council. Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus.

“Some SOEs will be retained, while others will be rationalised or consolidated,” he said.

The National Treasury would outline the criteria for government funding of SOEs during the upcoming financial year, he added.

DENEL & SAA
Unsurprisingly, the Treasury has announced that defence group Denel was still struggling to meet its obligations as they fall due.

Government had allocated the military and aerospace equipment manufacturer R3-billion in the current financial year to cover capital and interest payments on guaranteed debt.

Denel’s guarantee facilities decreased to R3.4-billion after R2.5-billion lapsed following the cancellation of its Egyptian missile contract and the maturity of R1-billion of its debt.

The Budget 2022 document states that broader alignment is required between the departments of Defence and Public Enterprises, as well as the Treasury and other relevant stakeholders to agree on Denel’s future.

This would enable Denel to enter into a strategic equity partnership, dispose of noncore assets and consolidate operations.

In the case of South African Airways (SAA), R16.4-billion had been set aside in 2020 for the local airline over the medium‐term expenditure framework period to settle State‐guaranteed debt and interest costs.

To date, government has paid R14.6-billion of this amount, with the remaining R1.8-billion to be paid in 2022/23.

In addition, the 2020 Medium Term Budget Policy Statement allocated R10.5-billion to SAA in 2020/21 for the implementation of a business rescue plan. The Department of Public Enterprises aims to finalise the partial sale of SAA to an identified strategic equity partner this year.

The carrier started scheduled flights in September 2021, in line with plans for a conservative re‐entry into the domestic and regional markets. It intends to re-introduce long‐haul routes in the second half of this year.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Rio-Carb
Rio-Carb

Our Easy Access Chute concept was developed to reduce the risks related to liner maintenance. Currently, replacing wear liners require that...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (12/07/2024)
12th July 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.368 0.43s - 189pq - 2rq
Subscribe Now