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File Image: IOL

MPs call for tough bailout rules for SOEs

By SIYABONGA MKHWANAZI Time of article published Jul 25, 2019

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Parliament - Members of Parliament are getting tough with ailing State-Owned Entities (SOEs) after they demanded they meet strict conditions after they were given billions of rand in bailouts by the National Treasury.

Finance Minister Tito Mboweni announced in Parliament this week that Eskom, SA Airways, SABC and Denel would get bailouts after facing cash crisis.

But members of the select committee on appropriations in the National Council of Provinces said yesterday they want tough conditions for the SOEs getting the bailouts.

Dennis Ryder of the DA said the National Treasury would not just release money without any conditions and this was a lot of money.

He said Eskom, the SABC and Denel must all be given strict conditions for the bailouts.

“We as the select committee must insist there are conditions attached to these disbursements. If there are conditions they must be outlined,” Ryder said.

Chairperson of the committee Dikeledi Mahlangu also said it was appropriate for the National Treasury to put out conditions to the SOEs before the funds were released.

She said the Treasury must return to Parliament next month where it will give them the list of the conditions for each of the entities.

The electricity public utility was given a bailout of R59 billion and this will be spread over two years. The R59bn is in addition to the R23bn given in February by the minister during his budget speech.

The public broadcaster will urgently get R3.2bn to avoid the deepening crisis. The aerospace and military technology group has requested R2.8bn, while the national carrier airline needs R5bn to stay afloat.

Director-general in the National Treasury Dondo Mogajane said there were very strict conditions for each of the four entities given bailouts.

Some of the conditions include identifying and selling non-core assets to generate revenue.

He said they will give MPs the list of conditions to be met by the four SOEs. He said at the SABC there were 11 conditions to be met before the funds are released.

This would include the business case of the SABC and the sale of non-core assets.

The government was in a tough position with the SOEs in financial crisis and they need to intervene to avoid the collapse of the entities, he said.

“Based on the current guarantee and framework if any of the SOEs default there could be a call on guarantees and there could be a cross-default.

"We have never had these challenges in the SOEs 10 years ago that we have now,” Mogajane said.

President Cyril Ramaphosa had also said if the lenders could call on their guarantees, the state would not have the money to pay for all the loans of the SOEs at once.

Political Bureau

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