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Public enterprises dept should have more powers over SOEs - Parliamentary report

Oct 21 2019 15:55
Khulekani Magubane, Fin24

Parliament's Portfolio Committee on Public Enterprises has thrown its weight behind a call to give the ministry more authority over South Africa's state-owned entities, recommending that a bill that would give it more oversight be fast-tracked.

The committee's Budgetary Review and Recommendation Report was released on Monday.

"[The department should] fast-track the introduction of the Shareholder Management Bill, which will empower the department to carry out its oversight responsibilities over SOCs [state-owned companies] more effectively, especially in providing guidance on how to align SOCs' strategic priorities with government policies," the report read.

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In July, Public Enterprises Minister Pravin Gordhan told Parliament that a green paper for the Shareholder Management Bill, which would allow the department to exercise stronger oversight over parastatals, would be adopted next year.

Earlier this month, the portfolio committee was told of administrative challenges facing SOEs, including irregular expenditure among the entities under the Department of Public Enterprises, which went from R31.4bn in the 2017/18 financial year to R86.2bn in the 2018/19 financial year.

According to Gordhan's previous remarks, the bill seeks to empower the department to execute its shareholder management responsibility and oversee the state of government's entities.

The minister, being the shareholder representative, would likely exercise this responsibility.

He said the green paper for the bill – an initial discussion document – would be under development during this financial year.

The committee has also asked the department to provide it with shareholder compacts signed with state-owned entities in order to enhance the committee's oversight role as well, within one month of signing the agreement.

The report said while ownership questions remain regarding SOEs, it remained crucial to appreciate that entities cannot perform optimally "in their current form".

READ: Government meddling sets black execs up to fail at SOE 'slaughterhouses' - BMF

"The continual bailouts and guarantees are placing the South African economy at risk. A model which will limit government exposure through providing guarantees and financial support to SOCs is currently explored by the minister of finance," the report said.

It concluded that the department should partner with National Treasury in the development of a sustainable business model, which would assert the role and mandate of the department.

The report's recommendation comes amid criticism from unions and lobby groups that have blamed government interference for instability at some SOEs.

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