Private investment in parastatals and selling off some of their assets are part of the state’s plans to lessen their drain on its finances, Finance Minister Nhlanhla Nene said in his 2015\/16 budget on Wednesday.<\/p>\n
“Fiscal support to state-owned companies over the period ahead will be financed through offsetting asset sales so that there is no net impact on the budget deficit,” Nene said in his first main budget speech in the National Assembly.<\/p>\n
He noted that state-owned companies would invest some R360 billion in the next three years through projects such as Transnet’s freight modernisation programme, and that this would account for about a fifth of the country’s gross capital formation.<\/p>\n
“However, the financial position of some state enterprises is unsatisfactory, undermining their ability to contribute toward development.”<\/p>\n
Nene said reforms were needed to ensure that parastatals contributed towards building a competitive economy and did not drain the fiscus.<\/p>\n
This would mean ensuring that their developmental mandates were appropriately financed.<\/p>\n
Nene avoided, as his predecessor Pravin Gordhan had, the politically fraught term privatisation, but in addition to selling off public enterprises’ non-core assets he stressed that private funding and partnerships were part of the plan to turn around those that were struggling.<\/p>\n
“Private investment and partnerships with state-owned companies are elements of our strategy for strengthening infrastructure investment and improving service delivery.”<\/p>\n
Nene confirmed that the first instalment of a R23 billion lifeline would be paid to Eskom in June, with two more to follow, but promised no new cash injections for South African Airways and the SA Post Office.<\/p>\n
He said SAA had so far drawn R8.3 billion of the R14.4 billion government made available to it in guarantees.<\/p>\n
However, the state’s allocations to the SA National Roads Agency Limited (Sanral) were set to grow by 5.9% over the three-year medium-term expenditure framework.<\/p>\n
Nene confirmed that cost recovery from users remained government’s guiding philosophy on funding certain forms of infrastructure, and that this would apply to roads.<\/p>\n
He said government had heard the concerns about the socio-economic impact of e-toll tariffs in Gauteng, hence it would shortly announce a revision of monthly ceilings.<\/p>\n
“But cost recovery from road-users will continue to be the principal financing mechanism for this major road system.”<\/p>\n