A number of state-owned companies have requested billions of rands in funding from the government to help them weather the impact of the coronavirus crisis, National Treasury said in a parliamentary presentation on Tuesday.
Reuters reports that the requested bailout amounts to almost R10 billion, while other state-owned companies have warned of closure if they do not get much-needed funding.
The amounts requested include:
- The Post Office had requested R4.9 billion in support;
- The South African Broadcasting Corporation (SABC) is seeking R1.5 billion;
- Airports company ACSA had applied for an equity injection of R3.5 billion because of the impact of Covid-19;
- Arms firm Denel faces the risk of entering bankruptcy protection or being liquidated;
- Power utility Eskom’s financial performance was worse than budgeted for as a result of limited economic activity during the pandemic.
A presentation given by the Department of Public Enterprises at the end of August shows that losses at South Africa’s state-owned enterprises have continued to pile up in 2020.
Diamond mining company Alexkor reported a loss with no revenue-generating activities and the company’s cash reserves are expected to be depleted by September 2020.
Eskom doesn’t generate enough cash to meet its costs and is surviving on government bailouts. Its debt pile stands at R454 billion, of which R300 billion is guaranteed by the government
SAA was placed under business rescue in December 2019, due to declining performance and its inability to pay its debts.
SA Express was placed under business rescue in February this year and was subsequently placed under provisional liquidation on 29 April 2020 by the High Court. The provisional liquidators have advertised the expression of interest for the sale of the business.
No money to spend
The bleak financial data comes after National Treasury said that there are no additional resources available for government departments in the next three years.
Any additional allocations will have to be funded from reductions in other programs, either within the department’s budget, or from another department’s budget, according to the document presented by Edgar Sishi, the acting head of the budget office, to the National Economic Development and Labour Council this week, and seen by Bloomberg.
The Treasury said in a supplementary budget presented in June that it planned to raise an additional R40 billion ($2.4 billion) in revenue over the next four years.
The document presented this week shows that will be made up by R5 billion in 2021-22, R10 billion in 2022-23 and in 2023-24 and R15 billion in 2024-25.
Additional tax measures will be announced in February, according to the presentation. Improvements in collections by the revenue service will help and research and analysis is being done on wealth taxes, it said.