'State-owned companies pose risk to budget targets'

Picture: Dean Hutton

Picture: Dean Hutton

Published Oct 26, 2016

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Cape Town - The growing cost of funding South African state firms, along with persistently low growth, poses a substantial risk to government meeting its budget targets, the Treasury said on Wednesday.

"Several state-owned companies could pose risks to the public finances. In particular, government is closely monitoring South African Airways, the South African Post Office, SANRAL (South African National Roads Agency Limited) and Eskom," the Treasury said.

Government's contingent liabilities, which include guarantees to state-owned firms, grew to R469.9bn from the R467bn seen in the February, with investments in energy and power utility Eskom accounting for the largest chunk.

Treasury said total guarantee exposure stood at R263bn, with support for Eskom's capital investment programme accounting for more than R170bn.

A R200bn guarantee had also been set aside to purchase power from independent producers (IPP) if Eskom fails to abide by an agreement approved by the national energy regulator agreement to buy electricity from IPP's over the next 20 years.

"Should Eskom be unable to do this, government must purchase the power on Eskom's behalf," the Treasury said in the statement.

Reuters

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