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Public Enterprise Minister Pravin Gordhan says they are not going to liquidate the SAA and that business rescue professionals should turn it around. Photo by Misheck Makora
- Members of Parliament on Thursday debated the financial burden of maintaining state-owned non-profit companies.
- Minister Pravin Gordhan says that in the coming years, the government will ensure that state-owned companies are no longer dependent on the fiscus.
- The minister responded to the DA parliamentarians for not presenting solutions but for resorting to criticizing and forgetting the damage caused by state capture to these entities.
The government is working to ensure that state-owned companies are not dependent on the fiscus in the coming years, but it will take time and the damage of state capture to these entities must first be addressed, Public Enterprises Minister Pravin Gordhan said.
On Thursday, the minister was responding to a debate on the financial burden of sustaining non-profit state enterprises (SOEs) during a session of the National Assembly.
Earlier on Thursday, President Cyril Ramaphosa chaired a virtual inaugural meeting of the SOE Presidential Council (PSEC). Ramaphosa had appointed the panel in June to support the government in repositioning state-owned companies so that they could be effective in their mandates of economic transformation and development. The inaugural meeting discussed the country’s economic recovery and reconstruction plan, as well as an overview of state-owned companies and the Council’s terms of reference, the presidency said in a statement.
The council is expected to undertake a process of streamlining state-owned companies. Finance Minister Tito Mboweni told parliament on Wednesday that the government has an obligation to keep state-owned companies running, but to make sure they do not drain financial resources.
Last week, Mboweni announced that the national airline SAA would receive R10.5 billion to support its business rescue process. The decision has come under criticism, as the funds had to re-prioritize from other national departments, their entities, and conditional grants to provincial and local governments. Both Mboweni and Gordhan have said the assignment does not constitute a ransom.
Gordhan has said that the restructuring of the airline would be far more beneficial than liquidation: It could preserve jobs, maintain competitiveness in the aviation sector so that consumers do not take prices, and avoid negative effects on other industries that depend on it. the aviation sector.
During Thursday’s debate, Gordhan reiterated his view that the R10.5 billion for SAA is not a ransom: it was intended to pay cuts and voluntary severance packages, reimburse consumers for tickets for flights not flown, among other things. He said the district attorney’s opposition to the funding was akin to telling SAA clients to “go to hell” and lose their money.
Gordhan also said the government was not blind to “fiscal realities.” “We will ensure that the dependence of state companies on the fiscus is eliminated,” he said. He said that state-owned companies have the potential to be “exemplary” institutions, but that hard work is required to repair the damage of state capture, something that some opposition parties, namely the DA, “deny.”
He suggested that perhaps the district attorney was too scared to face the “monster” of state capture and do the hard work of taking on individuals who cost the country billions.
He broke with the speeches made by Geordin Hill-Lewis Alf Lees and the DA MP Ghaleb Cachalia, saying that they did not propose solutions, but instead resorted to criticizing and repeating problems that everyone already knew.
In his speech to the debate, Hill-Lewis described how past bailouts and possible future bailouts have ruined the country’s finances.
“Transnet cannot operate a rail network … Eskom cannot produce enough electricity, SAA cannot fly, Denel is insolvent and Land Bank has defaulted,” Hill-Lewis said. “All the state companies are bankrupt and bankrupt.”
However, the ANC deputy and chairman of the public companies committee, Khaya Magaxa, said that what the prosecutor described as bailouts was recapitalization, something that is normal in many countries. He said the funds have conditions and are not direct bailouts. He said that the R10.5 billion for SAA is a temporary measure to stabilize and guarantee its operational and commercial efficiency.
