Durban — South African taxpayers forked out an estimated R478.5 billion to bail out state-owned companies (SOCs) due to a significant decline in their performances.
This was revealed when the standing committee on public accounts was briefed on SOC bailouts and government guarantees on Tuesday.
The 2012 Presidential Review Commission of SOCs highlighted several challenges facing these entities, including multiple and conflicting objectives and inadequate financing policies and frameworks. The commission also found a lack of adequate oversight and accountability, severe weaknesses in board composition and functioning, and a lack of transparency and accountability.
Since 2012, there has been a significant decline in the performance of major SOCs as operational costs have increased, net profits have fallen and debt levels have become increasingly unsustainable.
The briefing report stated that the government’s exposure to contingent liabilities emanating from guarantees issued to public entities (representing utilised guarantees) is expected to reach R396.1bn, up from R384.7bn as at March 31, 2021.
The total issued guarantees declined from R581.6bn in 2020/21 to a projected R478.5bn as of March 31, 2023. Exposure to Eskom comprises 85.3% of the total. Historical SOC bailouts include R331.2bn in recapitalisations over the period 2013/14 to 2022/23, of which Eskom accounts for 55% of the total recapitalisations.
In 2008, Parliament approved that funding totalling R60bn be provided in the form of a subordinated loan to Eskom to support its capital expenditure programme. The money was appropriated as follows: R10bn in 2008/09, R30bn in 2009/10 and R20bn in 2010/11 through the budget of the National Treasury.
In the February 2019 Budget speech, the minister of finance announced that the government had set aside R23bn per year for 10 years to financially support Eskom, with the accumulated fiscal support amounting to R230bn.
The total direct recapitalisation amount for SAA from 2007 until the airline was placed into business rescue in December 2019 amounts to R22.8bn. An additional R16.4bn was allocated over the 2020 Medium Term Expenditure Framework (MTEF) period for the repayment of government-guaranteed debt.
An additional R10.5bn was also made available to SAA in 2020/21 for the implementation of the business rescue plan following the 2020 Medium Term Budget Policy Statement. The finance minister has also announced an additional allocation of R1bn in the February 2023 Budget speech for SAA for the settlement of outstanding business rescue process obligations.
Therefore, when the 2023 Appropriation Bill has assented into law, SAA will have received a total of R50.7bn in direct government funding from 2007 to 2022, of which R48.4bn would have been received in the past 10 years.
The Covid-19 pandemic negatively affected the operations of Airports Company South Africa (ACSA), which recorded a 92% decline in traffic volumes in the first six months of 2020/21 when compared to 2019/20. As a result, the government allocated R2.3bn to ACSA in the 2020 Medium Term Budget Policy Statement.
The Special Appropriation Act 2022 provided Transnet with R2.9bn to accelerate locomotive repair and maintenance. The Adjustments Appropriation Act 2022 provided an additional R2.9bn to Transnet to restore infrastructure damage caused during the April 2022 floods in KwaZulu-Natal.
The South African National Roads Agency (Sanral) was allocated R23.7bn to settle maturing debt and debt-related obligations, including debt obligations related to the Gauteng Freeway Improvement Project (e-tolls) through a Special Appropriation Bill last year.
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