Gordhan warns state enterprises

Cape Town - Government institutions must stop calling upon the fiscus every time they find themselves in difficulties.

This was the warning Finance Minister Pravin Gordhan levelled at state institutions at a sitting of parliamentary economic committees on Monday.

He warned state-controlled enterprises to tighten their belts and think "carefully" about the risks they were running, particularly in the recession.

Gordhan said these risks were being faced not only by government entities such as South African Airways (SAA), but also by the entire country, because government could not allow such institutions to go bankrupt.

At a press conference on Monday Public Enterprises Minister Barbara Hogan stressed that government concerns like SAA would not be sold. She said the debate on privatisation belonged to a different era.

Earlier this month she had suggested to the committee on public enterprises that inefficient state-controlled institutions might be sold.

She said entities such as Transnet and Eskom would play an increasingly important role in the South African economy. She reckoned that it was unfair to question these enterprises' long-term sustainability in times of economic recession.

Many of them had no reserves, she pointed out. As far as funding models were concerned, she said that, as in the past, consideration had to be given to issuing government bonds instead of large rescue packages from the state. It was important to arrive at a long-term funding model.

She referred to Eskom, which was waiting for Thursday's decision by the National Energy Regulator (Nersa) on the its application for a 34% tariff increase.

This application is merely to help cover Eskom's operating costs. The company needs a further R385bn over the next five years for its capital expansion. By 2026 Eskom wants to double its present capacity - at a possible cost of more than R1 000bn.

The R1.6bn allocated to the recapitalisation of SAA has not been paid over yet, Hogan continued. She joked that she and her deputy minister, Enoch Godongwana, were referred to by Treasury as "ministers of recapitalisation, the funding model and government guarantees".

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.