Sustainable solution needed for struggling SOCs

Wednesday, October 30, 2019

 Governance failures and poor operational performance at some state owned companies continue to pose a risk to the fiscus, National Treasury said on Wednesday.

In its Growth, Sustainability and Renewal document, Treasury said decisions are required to manage the ongoing impact of these entities on the fiscus.

The document notes that state owned companies (SOCs)  are adding to spending pressures on government, with funding for South African Airways (SAA), the South African Broadcasting Corporation (SABC) , Denel and South African Express amounting to R10.8 billion in the current year.

Meanwhile, the national carrier, SAA, is unlikely to generate sufficient cash flow to sustain operations in its current configuration.

“Government will repay SAA’s outstanding government guaranteed debt of R9.2 billion over the next three years to honour its contractual obligation. Operational changes at SAA are required urgently,” it noted.

Speaking to media ahead of the tabling of the Mid-Term Budget Policy Statement (MTBPS) in Parliament, Mboweni lamented the position government finds itself in.

 “How long are we going to be on this flight path? Forever? I think not,” he said ahead of the tabling of the MTBPS.

The Minister stressed that operational and governance interventions are required as a matter of urgency.

The Minister was pleased that there is conversation around SAA gaining potential equity partners.

“I am pleased to learn that there are conversations involving SAA and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles,” he said. -