Telkom stake could finance SAA bailout
Finance minister Malusi Gigaba has submitted a note to Speaker of the National Assembly, Baleka Mbete, expressing his desire to sell state assets to finance a multi-billion rand SAA bailout.
It was reported on Friday that, in the letter, SAA has to pay its lenders R16 billion in 2017, and that a R2.2 billion bailout announced earlier this month was part of that.
While the R2.2 billion is coming out of the country’s ’emergency funds’, the remaining R13.8 billion still needs to be accounted for, and Gigaba has indicated that state assets will be where Treasury looks.
“Government is currently identifying assets for disposal to offset the expenditure incurred and render the operation neutral in respect of the current year’s budget balance,” Gigaba said.
According to DA deputy shadow minister of finance, Alf Lees, one of the possible places government could get R14 billion, is through its stake in Telkom, which is held by the Public Investment Corporation.
The move would not be unprecedented, as government sold its stake in Vodacom in 2015 to raise R23 billion to recapitalise Eskom.
However, analysts and opposition parties have criticised government’s plans to bail out SAA in a similar fashion, saying that, with no conditions attached to the bailout, the failing airline is getting a free ride.
SAA posted a R1.9 billion loss for its 2015 financial year, following a R1.5 billion loss in the year prior. Early reports point to a loss of as much as R4.5 billion in the 2016 financial year.
Industry experts have said that the airline loses around R500 on every ticket sold – and is losing R370,000 a month.
“It is appalling that SAA has been allowed to accumulate losses that amount to R15.7 billion over the last five years,” Lees said.
“We will robustly monitor Gigaba and National Treasury closely to ensure that the recapitalisation of SAA is budget neutral and that former Finance Minister, Pravin Gordhan’s, other commitments in his 2017 budget speech to prioritise a return of SAA to profitability as well as to expand private participation in SAA are adhered to.”
Read: SAA bailout is a black mark against SA’s economy, Fitch warns
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