Cape Town - Three more state-owned entities – SAA, the Land Bank and South African Post Office (Sapo) – have received bailouts totalling about R8.5 billion in the 2023 Budget.
On Wednesday, Finance Minister Enoch Godongwana allocated R1bn to SAA to assist the carrier with the business rescue process.
Godongwana also allocated R2.4bn to Sapo.
“Allocation of R1 billion to SAA will assist the business rescue process and the R2.4 billion to the Sapo to implement its turnaround plan will reduce contingent liabilities,” Godongwana said.
“The allocations for these state-owned companies will be accompanied by strict conditions to ensure sustainability, accountability and transparency.
“If the conditions are not met, the money will not flow,” he said when tabling his Budget.
Godongwana also said the Land Bank remained in financial distress and the process to finalise its solution was ongoing.
“The R5 billion that was retained in the 2022-23 contingency reserve in the 2022 medium-term budget policy statement will be allocated to the Land Bank with conditions attached to its use,” he said.
The bailouts were in addition to the government taking more than R254bn of cash-strapped Eskom’s R400bn debt burden to the national balance sheet as part of efforts to strengthen its weak financial position.
The support effectively takes the form of a loan from the National Revenue Fund to Eskom with strict conditions, and a direct debt takeover of a portion of the utility’s loan portfolio.
The National Treasury said the other SOEs – Denel, Sanral and Transnet – would reduce contingent liabilities and this would enable the entities to continue supporting economic growth.
A special appropriation totalling R30bn was made last year for Transnet, Sanral and Denel during the medium-term budget policy statement to reduce their risks.
Last year, Godongwana had said the SOEs should be self-sufficient and should contribute to economic growth.
“Unfortunately, we face a situation where financial weakness caused in previous years by bad leadership and corruption still needs to be resolved.”
Godongwana also said as balance sheets were being restored, and those who looted were being held accountable, there was no choice but to act to keep the SOEs running.
He said additional funding for Denel, Transnet and Sanral would allow the entities to adjust their business models and restore their long-term financial viability.
The minister noted that financial support to the SOEs remained a challenging balancing act.
“Funding to SOEs will now come with strict pre- and post-conditions.
Preconditions mean that SOEs will need to comply with these conditions before they receive government support. Non- compliance means no funding.”
Cape Times