Taxpayers shell out nearly R300bn in SOE bailouts

Taxpayers have coughed up nearly R300 billion in bailouts to four struggling state-owned enterprises falling within the Public Enterprises Department over the past five years.

Eskom received the lion’s share of the government’s bailouts, which amounted to a whopping R234bn during the same period. The government has received only R1 million in dividends from just one of the SOEs since May 2019.

This was revealed by Public Enterprises Minister Pravin Gordhan when he responded to parliamentary questions from DA MP Farhat Essack.

Gordhan’s responses showed that the SOEs received the following amounts in bailouts:

• SAA received R33.1bn.

• Eskom R234.6bn.

• Transnet R11.7bn.

• Safcol received nothing.

• Alexkor received nothing.

• Denel obtained R9bn.

Gordhan said Eskom has received government support of R158.6bn through the Special Appropriation Act of 2019 and R76bn, which includes R13bn expected to be received by the end of March 2024.

“It must be noted that these are not bailouts, but government support is required to mitigate the fact that the allowed revenue under the Nersa multi-year price determination allowable revenue theory is understated.”

He also said Transnet received an equity injection of R5.8bn from the government in February 2023 to accelerate the rehabilitation of long-standing locomotives and to cover losses incurred due to the KwaZulu-Natal flood damage in April 2022.

The minister said that the environment the SOEs operated in was that all the entities were affected by state capture.

“The following had an impact on the state-owned companies: financial and liquidity position, increased operating costs, technical impact on the operational performance, there was erosion of skills, and boards were compromised.

“The entities began stabilising and recovering from the effects of state capture as the new administration started addressing the state capture.

“No bailouts were provided to State-Owned Companies (SOCs) but rather capital invested in SOCs to put them on a path of sustainability; and since then, the SOCs have progressed towards sustainability,” Gordhan said.

Gordhan has also maintained that the now-failed sale of shares at SAA to Takatso Consortium was undertaken in the national interest.

He made the statements in reply to DA MP Haseena Ismail, who asked how an unnamed person became part of the Takatso deal when he was a lead shareholder in Lift, a direct competitor.

Ismail also wanted to know Gordhan’s basis to agree on the R51 sale for each SAA share.

Gordhan, in his written response to Ismail, said his department and ministry had always acted in the best interests of the state.

“Many detractors and liars have attempted to cast doubts on the integrity of this process, but without any unassailable facts.

“The fact that the transaction did not proceed is testimony to the fact that based on new valuations of the business and assets of SAA, if fair value was not attainable, then the transaction must be terminated,” he said.

Gordhan said there has been no “conflict of interest” or anything contrary to the findings of the Zondo Commission. He explained the process that was followed in selecting Takatso Consortium as the preferred strategic equity partner.

“The initial selection process did not yield the desired outcome as none of the interested parties met the above criteria.

Towards the end of February 2021 the department received further expressions of interest,” he said.

Gordhan said that after four parties were shortlisted and subjected to an evaluation process and scoring, Harith General Partners and Global Aviation, which had partnered with Lift, was then shortlisted.

“They proceeded to the due diligence stage and concluded a memorandum of understanding as a consortium after both parties presented their intention to bid as a consortium, Takatso Consortium. The department was satisfied with Takatso Consortium’s proposal since it met the department’s requirements.

Takatso had the requisite combination of financial and operational capabilities required for the successful relaunch of SAA.”

He also said the Cabinet approved the deal since Takatso Consortium met the government’s selection criteria and that the deal was in the best interest of SAA and the government as it would contribute to SAA’s financial and operational suitability.

Cape Times