Mboweni says he has no plan to use emergency powers to fund SAA
CAPE TOWN - Finance Minister Tito Mboweni has said in court papers that he has taken no decision to use emergency powers to avail money from the National Reserves Fund to South African Airways to bankroll its business rescue plan.
Mboweni, in an affidavit submitted in response to an urgent court application by the opposition, further stressed that he had not committed National Treasury to dipping into the state's coffers to find R10.1 billion urgently needed by the airline. Instead, the commitment was to mobilise funding from other sources, or using other mechanisms.
"The wording of the letter is significant. Government has not committed to funding the requirements of the business rescue plan but has instead committed to mobilising funding for the short-, medium- and long-term requirements to create a viable and sustainable new South African national airline," he said.
The Democratic Alliance had approached the Western Cape High Court for an order barring Mboweni from using section 16 of the Public Finance Management Act, which allows the minister to find emergency funding for unforeseeable needs, to finance SAA's retrenchment process and resumption of full flights.
Mboweni said they were acting on mistaken assumptions. Therefore, he added, their court application also lacked the requirements for urgency.
"No such decision has been taken. Neither is such a decision imminent," he said.
He added that the government had not yet decided how to source the funding but was considering several options.
These included the government retaining a portion of the issued share capital in the new airline, finding private equity partners or strategic partners to take up shareholding in the new airline or approaching local or international funding institutions.
Mboweni also mooted the investment of pension funds into the restructured national carrier.
"Institutions may be approached for investment of pension funds," he said in the court papers.
DA finance spokesperson Geordin Hill-Lewis said the party had decided to withdraw its court application from the urgent court roll, given the commitment that the use of section 16 was not on the cards.
"However, we have retained our application on the normal court roll, should the need arise in future to prevent the minister using section 16 of the PFMA for the same purpose."
The legal provision was controversially used by former finance minister Malusi Gigaba in 2015 to avail R3 billion to SAA.
The airline has lost tens of billions of rand in the past two decades.
Mboweni publicly expressed a preference for closing it down, but Cabinet has given its backing to a business rescue plan that was adopted by the company's creditors last week. It will see the retrenchment of 2,700 members of the airline's staff.