JOHANNESBURG - Struggling state-owned enterprises (SOEs) have approached the National Treasury for further bailouts amounting to billions of rand.
The Treasury yesterday told Parliament that a number of SOEs had approached the government with requests for further recapitalisation.
The bailouts could push the national debt higher. It is already projected to be about R4trillion, or 81.8percent of gross domestic product, by the end of this fiscal year.
The Treasury’s chief director for SOE oversight, Ravesh Rajlal, told the Standing Committee on Appropriations that Denel was facing possible liquidation, the SA Post Office was on the brink of collapse, and that Airports Company South Africa (Acsa) could fail to repay its debt.
Rajlal said the Treasury would look at reducing the government’s exposure to SOE debt and review the composition of government guarantees.
“We need to highlight the fact that the government guarantee exposure has increased by more than 100percent from R129billion in 2019 to around about R413bn in March 2020,” Rajlal said.
“We need to address the quality of actual government guarantees, because, historically, it has been used for going concerns or for operational expenditure.”
Rajlal said arms manufacturer Denel had requested to relax the conditions of R504million to be used for working capital and to pay salaries.
Denel has failed to pay salaries, creditors and statutory payments, such as medical aid, tax and UIF, under guaranteed debt amounting to R3.415bn.
“There is still a risk of the entity being placed in business rescue or even liquidation,” Rajlal said. “The challenge we have seen over the years is the slow implementation of the turnaround plan.”
Rajlal said the Post Office was at a critical juncture and had requested R4.9bn in government support.
He said if the shareholder department did not act to restructure and repurpose the entity, the Post Office would collapse. “Government must decide whether (the Post Office) has a role to play as (the) delivery arm of government. If not, then (the Post Office) must be drastically restructured, as the entity will not be able to continue in its current form without yearly funding from the government to cover its losses,” he said.
Rajlal said Acsa forecast a net loss of R5bn in the medium term as air traffic volume had declined by 50percent.
“(Acsa) will be reducing their operational expenditure by R1.2bn per annum over the next five to six years. Credit metrics have deteriorated,” he said. “Acsa has requested a three-year R3.5bn guarantee. At the same time, they have also submitted a request for an equity injection of R3.5bn, because there is a high risk they won’t be able to service their debt.”
Acsa’s chief financial officer, Siphamandla Mthethwa, said there had been a slight reduction of the overall R6.6bn debt they had last year.
“(But) we are not able to comment further, as we are in a closed period ahead of (the) presentation of our audited financial results in the coming weeks,” Mthethwa said.
“The company has secured credit facilities totalling R3bn from three local banks to continue to meet financial obligations as they become due.”
Rajlal said the SABC would have to make critical decisions as it anticipates a revenue loss of R1.5bn this financial year. “The SABC will have to reduce its staff complement if it wants to be sustainable, this requires the support of its shareholder,” Rajlal said. “However, there are no liquidity concerns at this stage.”
At Eskom, Rajlal said year-to-date financial performance was worse than budget, due to a higher impact on revenue as a result of limited economic activity.
BUSINESS REPORT