SOE’s in SA need ‘urgent attention’

Johannesburg - Heavily-indebted South African public companies are draining government coffers to stay afloat owing to years of bad management and corruption during the terms of former president Jacob Zuma.

Cyril Ramaphosa, who has been president for almost two years, promised to clean up the companies but has in fact made little headway.

"State-owned entities require urgent attention," auditor-general Kimi Makwetu said in a report last week.

He added that the financial situation of state-owned enterprises in general "remained under significant pressure."

Makwetu voiced "significant doubt about whether some of the SOEs can continue with their operations in future without financial assistance."

Following are major problem cases, and one relatively positive one.

Eskom

Eskom provides around 95% of the electricity used in South Africa, mostly with coal-powered generating plants.

They are old and poorly maintained however, and result in regular power shortages that hamper activity in Africa's biggest economy.

Eskom employs 46 000 people and has amassed R450 billion in debt, even though the state has injected R128 billion into the company over a three-year period.

Ramaphosa plans to split the group up into three separate units, production, transportation and distribution.

Interim chief executive Zuks Ramasia acknowledged recently that the airline's accounts have been in the red for years, despite cash injections by the state.

SAA

SAA last reported a profit in 2011, and has R9.2 billion in debt.

In November, the carrier unveiled a restructuring plan that could eliminate almost 1 000 positions among its overall staff of nearly 5 200 people.

Former head Dudu Myeni, who was close to Zuma, has been accused of "illegal practices" and company mismanagement by a commission probing corruption under the former president.

SABC

The company owns three television stations and 18 radio stations that broadcast in 11 languages and employ 3 370 people.

It received a bailout package worth R2.1 billion in October.

From April 2017 to March 2018, SABC lost R622 million, on top of a record loss of around R970 million a year earlier.

Post Office

The South African Post Office has posted deficits for more than a decade owing to obsolete technology, an outdated business model and spotty service.

In February, the state injected R1.5 billion to keep the service running, and it recently announced that it will eliminate almost 800 jobs.

In June, the group that employs 3 400 people secured loans from a consortium of banks so that it could pay their wages, public enterprises Minister Pravan Gordhan has revealed.

In August, the state granted Denel R1.8 billion as part of a rescue plan.

Transnet

One company that stands out meanwhile is freight group Transnet, which employs 56 000 people.

In 2018, it reported record results with a 75% leap in net profit to R4.9 billion.

In January, Transnet nonetheless launched legal proceedings against several former executives to try to recover millions of rand.

Transnet charges that they siphoned off the money while attributing contracts in a non-transparent manner. – Nampa/AFP