Economy / 26 October 2017, 5:30pm / Siseko Njobeni
JOHANNESBURG - Finance Minister Malusi Gigaba yesterday said the government would not yet pursue the controversial nuclear build programme, as this was unaffordable, but would sell its Telkom stake to bail out SAA.
Gigaba said the government would opt for the selling of its assets in order to fund SAA and the Post Office, instead of borrowing, as the fiscal space had narrowed.
He said the government hoped to raise R3.9 billion from the Telkom shares, which he argued would be bought back at a later stage, fuelling speculation that the Public Investment Corporation would shelf it.
“The fiscal framework is at risk of being breached by R3.9bn, so we need to sell something that will bring us that R3.9bn,” he said.
“The impact of breaching the ceiling will be quite severe.”
The National Treasury has so far given the loss-making national carrier R5.2bn this year to pay its creditors.
Gigaba said SAA would receive a further R4.8bn before the end of the financial year to service debt and cover operational costs.
He said he was not prepared to continue using state funds to bail out state-owned enterprises to help them out of self-inflicted trouble.
“As the shareholder, we are tired of being dragged into crises by those whom we employ to govern and manage state-owned enterprises. This must end.”
The National Treasury has said that the sale of the government’s 39 percent stake in Telkom was not completely off the table.
Director-general Dondo Mogajane has said the government would have a list of assets to be disposed of by March next year.
“These do not necessarily have to be non-core,” he said.
Speculation about government’s intentions to off-load its stake in Telkom, which is estimated at R13bn, saw the listed telecommunications group caution its shareholders. But the group recently decided not to renew the cautionary.
Dondo said government’s stake at Telkom was paying off handsomely, with dividends of as much as R1bn.
Still an option
“It is important to hold on to it as much as we can,” he said. But he said the sale of the Telkom stake, which he said was worth between R14bn and R20bn, was still an option.
“It is an option that we have at our disposal.” He, however, said the government might not sell the entire stake. “It is a well-performing share.”
Gigaba said while nuclear remained part of the country’s energy mix, the programme was unaffordable.
He cited excess electricity capacity, saying the country had a surplus of approximately 5700MW “which is bigger than (the) Medupi power station.”
He said “for the foreseeable future” and given the low economic growth, nuclear was unaffordable.
When it came to the envisaged nuclear programme, South African would proceed “at a pace and scale we can afford.”