Parastatals under microscope

Cape Town - The Cabinet has instructed Minister of Finance Pravin Gordhan and Minister of Public Enterprises Barbara Hogan to compile a report on government institutions. It must focus on the institutions' financial standings and turnaround plans.

Government spokesperson Themba Maseko declined to say if the Cabinet's instruction arises from concern about the unsustainable condition of government institutions.

"It is to enable us continuously and proactively to keep an eye on government institutions and not discover problems only when more money is requested."

Hogan is charged with re-introducing the Inter-Ministerial Committee on State Assets. Maseko says the Cabinet wants to institute an early warning system so that financial and management problems in particular can be discerned before extra funds are required to solve problems.

The system will include all government institutions. Maseko says that at this stage the committee has an "open mandate".

He points out that the proposal to monitor government institutions did not come from Hogan. In June she was rapped over the knuckles by the ANC and the unions after she declared in parliament that state institutions that continued to struggle could be sold, but the problem would be to find buyers for them.

Vytjie Mentor, chairperson of the Portfolio Committee on Public Enterprises, challenged Hogan on her statements in an unusual public confrontation. Hogan subsequently softened her stance. She has previously declared that she is known as the "Minister of Recapitalisation and State Guarantees".

During the same month Gordhan warned government entities that they should stop appealing to the state?s coffers every time they landed in trouble.

He warned parastatals to tighten their belts, especially in the recession, because the government could not allow state entities to go under.

He said this when it was becoming evident that South Africa would be facing a budget deficit of about R6bn. These days this amount is regarded as a minimum for the budget deficit. Most government entities appear to be unsustainable without Treasury's help.

South African Airways requested R1.6bn from the government this year. Eskom requires another R88bn in funding for its expansion programme, although the government has already granted it R60bn. State weapons manufacturer Denel declared in its latest annual report that it cannot survive without a R1.7bn injection.

The government-controlled weapons purchasing agency, Armscor, is also in a financial pickle, according to its most recent annual report.

In June, the government approved R3.5bn for the recapitalisation of the Land Bank, and the SABC wants R2bn worth of government assistance.

This while chief executives of companies like Eskom and Armscor were recently in the news about their hefty salary increases.

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