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State arms firm Denel says it faces a funding gap of around $ 7.5 billion over the next five years for key capabilities such as ammunition production and aircraft maintenance.
In a presentation to the parliament’s committee on state-owned enterprises on Wednesday (October 21), the group said it needed R683 million to fill the funding gap in 2020/2021.
This is followed by the requirements of R635 million and R600 million in 2021/2022 and 2022/2023 respectively.
Denel warned that if this funding gap is not covered, it would significantly affect the sovereign and strategic capabilities of organizations, which if lost could threaten South Africa’s ability to defend itself.
Denel reported an unaudited loss of R1.8 billion in 2019/20, due to a ‘significant decline in revenue and poor program management,’ he said in his filing.
The group said it did not have the ability to pay full salaries (R391 million) and legal obligations have led to low staff morale. The group said that approximately 296 employees have left the company since April to date.
Denel added that non-payment of salaries has directly led to the loss of key technical personnel in some divisions.
Reuters reported that the Public Investment Corporation recently renewed R2.5 billion of Denel’s bonds for an additional 12 months, and the government disbursed more rescue cash to help Denel pay off the debt.
On top of that, Denel will receive another 271 million rand from the government this financial year.
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