Pretoria - State owned entities (SOEs) will invest about R360 billion over the next three years, Finance Minister Nhlanhla Nene said on Wednesday.
“State owned companies will invest about R360 billion over the next three years accounting for about 20% of South Africa’s gross capital formation,” he said as he tabled his first budget since becoming Minister.
These state owned companies, he said, play a key role in promoting economic growth and social development.
He however added that the financial position of some state entities is unsatisfactory, thereby undermining their ability to contribute towards development.
He said that reforms are required to ensure that these companies contribute to building a competitive economy and are not an unnecessary drain on the fiscus.
“As indicated in last year’s Medium Term Budget Policy Statement fiscal support to state owned companies over the period ahead will be financed through offsetting asset sales so that there is no net impact on the budget deficit. The required turnaround in performance and delivery on government priorities will be closely monitored under the Deputy President’s oversight,” the Minister said.
Eskom
When coming to Eskom, the utility will apply to the regulator this year for adjustments towards cost reflective tariffs.
In October last year, the minister outlined a broad package for Eskom- including a capital injection, governance improvements, operational cost containment, additional borrowing and support for required tariff increases.
At a media briefing before tabling the budget, the Minister said that the fiscal allocation of R23 billion, as announced in President Jacob Zuma's State of the Nation Address, will be paid in three instalments, with the first transfer to be made in June.
“All we are doing in this budget is to reaffirm the package. All we are doing is re-affirming our commitment to the package. The R10 billion will be realised around June and the other one before the end of the year,” said the Minister at the briefing.
Delivering his Budget Speech, the Minister said that a special appropriation bill will be tabled once the finance has been raised.
Additionally, government is in talks with business and is considering a wide range of options to improve energy efficiency and manage demand for electricity.
The options under consideration include expanding the use of smart meters, buying back power from large industrial users and varying tariffs by time of use.
SAA
When coming to national carrier South African Airways (SAA), government has also stepped in to address the financial position of the airline.
SAA reported a net loss of R2.6 billion in 2013/14 as a result of high operating costs, losses on several international routes and valuation adjustments.
“We have made guarantees of R14.4 billion available to SAA of which the airline has drawn R8.3 billion. Measures to achieve operational efficiencies and restore profitability are now in progress,” said the Minister.
Development finance institutions (DFIs)
The Minister said that several initiatives are in progress to strengthen the role of DFIs with several initiatives such as a review of provincial entities that has been initiated, aimed at enhancing their effectiveness and sustainability, as well as an organisational review of the Land Bank that will be conducted.
Additionally, the DFI aims to mobilise R100 billion over the next five years to promote faster industrial development, mineral beneficiation and agro-processing. - SAnews.gov.za
