Government to phase out non-performing state owned companies

Thursday, February 11, 2016

Pretoria - While many of South Africa’s state owned companies (SOCs) are performing well, those that are no longer relevant will be phased out, President Jacob Zuma said on Thursday.

Delivering the 2016 State of the Nation Address (SONA) to a joint sitting of the National Council of Provinces (NCOP) and the National Assembly in Parliament, President Zuma said these entities must be properly governed and managed.

“Many of our SOCs are performing well. Those companies that are no longer relevant to our development agenda will be phased out,” he said.

For the state owned companies to contribute to the successful implementation of the National Development Plan, they must be financially sound, he said.

In addition, government will ensure the implementation of the recommendations of the Presidential Review Commission on state-owned enterprises, which outlines how the institutions should be managed.

Deputy President Cyril Ramaphosa chairs the Inter-Ministerial Committee which is tasked with ensuring the implementation of these recommendations.

“We have to streamline and sharpen the mandates of the companies and ensure that where there are overlaps in the mandates, there is immediate rationalization,” said the President.

Government departments to which these companies report to, will set the agenda and identify key projects for the state owned companies to implement, over a defined period. Proper monitoring and evaluation will be done.

President Zuma said the South African National Roads Agency (Sanral) has built some of the best roads in Gauteng and in many parts of the country while the Trans Caledon Tunnel Authority has constructed dams of varied capacities, making it possible for people to have access to safe drinking water.

Transnet has built rail infrastructure which has enabled the country’s mines to move massive bulk of commodities through ports to markets around the globe.


Eskom has managed to keep the country’s economy going despite the challenges it faces.

“Progress has been made to stabilise the electricity supply,” said the President, adding that there has been no load shedding since August 2015, bringing relief for both households and industry alike.

In addition, government has invested R83 billion in Eskom which has enabled the power utility to continue investing in the Medupi and Kusile power stations, while continuing with a diligent maintenance programme.

Additional units from Ingula power station will be connected in 2017, even though some of them will begin synchronisation this year.

Renewable energy

In his address, President Zuma said the multiple bid windows of the Department of Energy’s Renewable Independent Power Producer Programme (REIPP) have attracted investment of R194 billion.

“This initiative is a concrete example of how government can partner with the private sector to provide practical solutions to an immediate challenge that faces our country.”

REIPPP is aimed at bringing additional megawatts into the country’s electricity system through private sector investment in wind, biomass and small hydro, among others.

Parliament also heard that government will this year select the preferred bidders for the coal independent power producers.

Request for Proposals will also be issued for the first windows of gas to power bids.


President Zuma said the nuclear energy expansion programme remains a part of South Africa’s future energy mix.

He added that nuclear will only be procured at a scale that the country can afford.

“Our plan is to introduce 9600 megawatts of nuclear energy in the next decade, in addition to running Koeberg Nuclear Power Plant. We will test the market to ascertain the true cost of building modern nuclear plants.

“Let me emphasise that we will only procure nuclear on a scale and pace that our country can afford,” he explained.

The decision to proceed with developing the nuclear new build programme was taken in principle by Cabinet in June 2015. –