Finance Minister Tito Mboweni  File picture: Werner Beukes/SAPA
Finance Minister Tito Mboweni File picture: Werner Beukes/SAPA

SABC, SAA, Denel to get slice of R13bn bailout for ailing SOEs

By Siyabonga Mkhwanazi Time of article published Jul 14, 2019

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Cape Town - Finance Minister Tito Mboweni has dipped into the contingency reserves to get R13 billion to rescue the SABC, SAA and Denel.

The contingency reserves were revised in February upwards to R13bn to meet the need of bailing out troubled State-Owned Entities (SOEs).

After struggling for months the cash-strapped SABC, SAA and Denel, the state arms manufacturer, would now get a slice of the cake.

SABC needs R3.2bn urgently while SAA said it required R4bn to survive the current financial year and Denel requires more than R2.8bn to meet the liquidity challenges.

Denel has said it has an order book pipeline of R30bn and the bailout would help it to conduct its business.

But Mboweni has said the bailouts would not come easy as they wanted to appoint chief restructuring officers in the ailing entities.

Communications Minister Stella Ndabeni-Abrahams had already promised Parliament that the SABC would get a portion of the bailout in 10 days and another big portion in 45 days.

Public Enterprises Minister Pravin Gordhan had also said Mboweni was going to outline the funding of Eskom and Denel.

President Cyril Ramaphosa had warned that Eskom was a financial risk to the economy and if it defaults on its loans it would cause a cross-default in all entities.

Eskom was sitting with a debt of close to R420bn.

But Mboweni said he would table a Special Appropriations Bill to provide funding to Eskom and other SOEs.

This is not the first time that government is tabling a Special Appropriations Bill to Eskom.

The National Treasury in 2015 tabled the special appropriations bill when it converted Eskom’s R60bn loan into equity.

The government also sold its 13.9% stake in Vodacom to fund Eskom and cover R23bn it needed at the time.

But the power utility is still not out of the woods yet as it requires billions of rand.

Ramaphosa said they would give Eskom a bailout of R250bn.

But this was necessary to avoid the collapse of Eskom as it would cost the country and the economy if Eskom imploded.

Eskom’s financial losses are also compounded by the expected financial loss of R20bn.

This will be the second loss in two consecutive financial years.

In the next few weeks Mboweni will provide direction on the exact amounts to be allocated to the three entities identified by Mboweni.

SAA told Parliament a few weeks ago that it will be able to break even in 2021. But Mboweni will determine the amounts to be given to SAA, SABC and Denel from the contingency reserves.

Political Bureau

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