Broke South African SOEs need a helping hand
The South African government needs private sector equity partners to turn around the fortunes of the nation’s failing state-owned enterprises (SOEs).
Speaking to the Sunday Times, Presidential Spokesperson Vincent Magwenya said that the strained fiscus can no longer afford to bail out struggling SOEs.
These comments come after it was announced that the deal to sell 51% of South African Airways (SAA) to the Takatso Consortium fell through.
The termination of the deal, where the Takataso consortium would pay R51 for the 51% stake before spending R3 billion to recapitalise the airline, was a mutual agreement.
Reports show that Takatso wanted the deal terminated due to a change in its structure after the airline’s valuation rose from R2.4 billion during Covid-19 to a current value of R6.5 billion.
There was also disagreement within the government, with the SACP, COSATU and factions of the ANC fighting against the privatisation of the SOE.
“There is still an intention, more broadly speaking, to have strategic partners to work together with government in the process of turning around struggling and ailing SOEs,” said Magwenya to the Sunday Times.
“What has never been the policy or an intention is what people who distort this process will say, that there is an intention just out of the blue to go into a wholesale selloff of state assets.”
Other successes
Despite the internal disagreements of the SAA sale, there was less pushback against privatising part of the Durban port, with an agreement that expertise and cash are needed amid Transnet’s woes.
Transnet will also provide a draft of its network statement in the next few days, allowing private companies to use its rail network of over 20,000 km.
The plan is to get private trains onto the tracks in the second half of the year. The failure to export commodities has severely hampered South Africa’s growth prospects.
National Assembly also recently passed the Electricity Regulation Amendment Act, which Mineral Resources and Energy Minister Gwede Mantashe said will radically transform the electricity sector.
The Bill will create an open market platform for competitive electricity trading, essentially ending Eskom’s monopoly over generation – whose failures are a primary cause of load shedding.
It also provides for the Transmission Systems Operator (TSO) to act as a wheeler and dealer of electricity.
It also strengthens the role of the National Energy Regulator of South Africa (NERSA) in licensing entities that wish to enter the generation market and providing regulatory oversight during the transition.
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