State companies rack up the losses as taxpayers sink R325 billion into bailouts

 ·16 Feb 2024

The National Treasury has given a new report to parliament on the financial situation of the state-owned enterprises (SOEs) in South Africa, which shows how much the government has spent on bailing out different SOEs in the country over the past several years – amounting to hundreds of billions of rands.

Financials for quarter 3 (October – December 2023) of Eskom, Transnet, South African Airways (SAA), the South African Post Office, the Land Bank, and Denel were presented to the Standing Committee on Appropriations on February 14, 2024.

Calculations from the presentation show that, since 2020, R325.3 billion has been allocated by the government for bailouts of the abovementioned SOEs.

Government bailouts by Seth Thorne


At the end of the third quarter of 2023 (Oct-Dec), Eskom reported a loss after tax of R7.5 billion, while total gross debt securities and borrowings increased to R439.3 billion.

Arrear debt remains a major challenge for Eskom, with total invoiced municipal arrear debt increasing to R75.4 billion.

“Eskom’s profitability remains hampered by poor long-term financial sustainability arising from an inadequate tariff path, poor generating plant performance, escalating arrear municipal debt as well as high debt servicing costs,” said Treasury.

The Eskom Debt Relief Act, published in July 2023, allocated R254 billion to the state-owned power utility over the next three years.

As of 31 December 2023, the Treasury had disbursed R44 billion to Eskom in the form of loans – R16 billion of which has been converted into equity.


“Transnet has become over-reliant on refinancing (raising additional debt) as a strategy to settle maturing debt,” said Treasury. As such, total debt levels have risen from R110 billion in 2015 to R130 billion in 2023.

The deterioration of Transnet’s financial position has led to the entity being unable to settle its 2023/24 debt maturities of approximately R14 billion.

Operational inefficiencies, poor productivity, theft and vandalism, and underinvestment in the actual network were pinpointed by the Treasury as some of the key drivers of this.

As such, in November 2023, the Minister of Finance concurred with the request by the Minister of Public Enterprises to issue an R47 billion guarantee to Transnet.

South African Airways (SAA)

The SAA Group reported a net loss of R761 million (2022: net loss R122 million) against the budgeted profit of R92 million.

SAA reported revenue of R4.4 billion (2022: R3.6 billion), which is 26% less than the budgeted R5.9 billion, and the entity achieved 18% savings on operating costs.

“However, the revenue deficit, coupled with foreign exchange losses, was more than the savings reported in operating costs, resulting in a net loss-making position,” said Treasury.

Back in September 2020, the cabinet approved that R10.5 billion be allocated to SAA for the implementation of the business rescue plan.

However, R2.7 billion of this has not been transferred to the SAA subsidiaries since the subsidiaries were not under business rescue.

In addition, the Minister of Finance allocated R1 billion in the February 2023 budget to settle outstanding business rescue obligations, totalling an R11.5 billion allocation.

South African Post Office (SAPO)

SAPO recorded a R976.6 million net loss in the third quarter against its annual profit target of R1.5 billion.

Revenue generated of R497.3 million (28% below budget). “The reasons for the underperformance were among others branch closures, load shedding and suppliers suspending their services due to non-payment,” said Treasury.

This contrasts with operating expenditure amount for quarter 3, which was R859 million.

As at 31 December 2023, SAPO’s outstanding liabilities was R4.8 billion. No government guarantees are currently in place for SAPO.

The post office’s unaudited quarter (Q3) 2023/24 performance continues to decline, with SAPO reporting only 7% achievement of its total 15 key performance indicators.

SAPO was placed in provisional liquidation by an order of Court in February 2023 after the entity was unable to pay its debts to creditors. In July, it was placed under business rescue.

It was recapitalised with R2.4 billion for the implementation of the “Post Office of Tomorrow Strategy,” prior to the entity receiving provisional liquidation order. Now, the allocation of funding is subject to various conditions.

Land Bank

As at the end of the third quarter (December 31, 2023), Land Bank recorded a net loss of R97 million against a budgeted profit of R99.4 million.

It generated a net interest income of R454 million, which is R196 million lower than the budget of R650 million and R87 million lower than the prior year’s amount of R541 million.

Total operating expenses for the quarter were R396.9 million. Treasury said that this is “mainly as a result of higher computer and data expenses, hedge breakage costs as a result of early repayments to [different entities], higher professional fees, travel and legal costs.”

The Land Bank has been in default since April 1, 2020. As a result, R7 billion was allocated to it during the 2021 National Budget, of which R6.5 billion has already been used to repay guaranteed lenders (R500 million) and transferred to the Land Bank (R6 billion).

The Land Bank has not yet met all the conditions relating to the equity funding from the National Treasury.


State-owned aerospace and military technology conglomerate Denel showed that as at 31 December 2023, year-to-date revenue was R847 million (37% behind budget).

“The shortfall was as a result of delays in the placement of orders by SAAF as per budget, non-delivery of spares within the required timelines and breakdown of critical machinery,” said Treasury.

The forecast for the full year ending March 2024 is R1.671 million, which is 15% short of the budgeted R1.972 million, while operating costs for the year to date amounted to R566 million.

As at 31 December 2024, Denel’s realised net loss amounted to R463 million, which is 37% worse than the projected R339 million in losses.

Denel implemented a turnaround plan which has a funding requirement of R5.203 billion, of which Denel committed to raise R1.8 billion through the disposal of identified non-core assets and the remaining balance of R3.378 billion was allocated by government subject to meeting certain pre- and postdisbursement conditions.

Read: New ‘mega’ state-owned company for South Africa is coming

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