Pravin Gordhan promises strict conditions for SOE guarantees

Cape Town – Public Enterprises Minister Pravin Gordhan has told Parliament his department will apply strict conditions when approving guarantees for the state-owned enterprises in its care.

On Friday, Gordhan issued a written response to a question from Congress of the People (COPE) leader Mosiuoa Lekota.

Both Gordhan and Finance Minister Nhlanhla Nene have adopted a no-nonsense approach to financially assisting under-performing entities, as government faces pressure from critics who say it should consider privatising and selling them.

There are already limits imposed on how much each entity can receive.

Lekota asked Gordhan whether he has "found that any further financial support and guarantees from the government [would] be required to ensure that the specified SOEs remain operational".

He also asked for details on Gordhan's policy projections regarding guarantees.

SOEs within the Department of Public Enterprises that have been given government guarantees are Eskom, Transnet, Denel and South African Express, Gordhan confirmed.

"The government guarantee is limited to a maximum of R350bn for Eskom, R3.5bn for Transnet, R2.4bn for Denel, and R800m for SA Express.

"Further financial support will be subject to SOEs providing a viable business case, clearly demonstrating that financial support will be utilised solely for advancing both commercial and developmental mandates," he said.

The form financial support would take is subject to his and the finance minister's joint assessment and concurrence on each application for the government guarantee, Gordhan added.

"I believe that short- to medium-term financial support or guarantees combined with changes in boards and management and a review of business strategies will be beneficial and fundamentally change the outlook for state-owned enterprises," he said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER