Minister of Finance Malusi Gigaba
Minister of Finance Malusi Gigaba

JOHANNESBURG - Finance Minister Malusi Gigaba has told Parliament that cash-strapped SAA  needed to repay local banks R5 billion by the end of the month. 

Gigaba wrote to Parliament on Friday saying that the loan could however be extended to 2019 if the lender's conditions were met. He said the conditions included the announcement of equity injection into the ailing airliner that he could outline in his Medium-Term Budget Policy Statement next week.

Gigaba was reporting on the R3bn lifeline the National Treasury granted to SAA in September. 

He said last month he had to invoke Section 16 of the Public Finance Management Act to get R3bn from the National Revenue Fund because this was an emergency. Gigaba said failure to settle the Citibank loan of R1.8bn by the end of September would have resulted in cross-defaults on other loans of the carrier.

Also read: WATCH: Local banks demand R5 billion leaving SAA in distress

He said this could not have been postponed for the Special Appropriations Bill in Parliament. At the time of the loan,  local lenders laid a number of conditions to extend their loans beyond the deadline of last month.

Part of the conditions was for the injection of R3bn into SAA of which R1.8bn was paid to Citibank and R1.2bn was used as working capital. 

“The agreement with the domestic lenders also provides for the option of an additional extension beyond October 31, 2017 to March 31, 2019 subject to inter alia, the required equity injection into SAA  being tabled during the Medium-Term Budget Policy Statement and approved by Parliament,” he said.

Gigaba also said they were still looking for assets to be sold at SAA  to recover the costs of R3bn. Gigaba’s report came a day after Telkom withdrew its cautionary note to shareholders in August that the government would not sell its 39 percent stake to fund SAA. The stake was expected to raise about R13bn.

Telkom said on Thursday that there was no government decision to sell its stake. 

Gigaba said, “To this end, government is currently identifying assets for disposal to offset the expenditure incurred, and render the operation neutral in respect of the current year’s budget balance. Details in respect of these operations will be provided at the time of the tabling of the adjustment budget in October.” 

The DA  on Friday questioned what the amount would be that constitute the “required equity” that  Gigaba referred  to in his report.
" Is it the R 5.2 billion already paid to SAA or the R10 billion that Minister Gigaba and National Treasury have recently said would be required in the 2017/18 financial year?" it said.

The also said it was not practically nor legally possible for Parliament to approve an Appropriation Bill by October 31.  

"It seems that Minister Gigaba assured banks and other domestic lenders that Parliament will approve an equity injection at some date after the 31st of October 2017. If this is the case it would be a very serious indictment and would simply reinforce the existing perceptions amongst South Africans that Parliament is just a rubber stamp for any and all decisions made by President Zuma and his cabinet."

SAA  has said in Parliament it needs a working capital of R2.4bn until the end of the current financial year in March. The national carrier also said recently it would post a loss of R2.8bn this year.

This followed other losses in the past few years. SAA is going into its Annual General Meeting next month where the audited financial statements would be approved.

- BUSINESS REPORT