THE National State Enterprises Bill aiming to reposition state-owned entities and identify interventions to stabilise and strengthen their financial and operational performance has been criticised.
Dismissed public enterprises director-general Kgathatso Tlhakudi said “the Bill was rubbish”.
The bill also aimed to establish State Asset Management (SAMSOC), a holding company that would oversee strategic SOEs.
SAMSOC would be 100% state-owned and tasked with providing coordinated oversight and monitoring of performance for all subsidiary companies.
This would separate the state’s ownership functions from policy-making and regulatory roles, minimising conflicts of interest and promoting coherent corporate governance standards.
This was after the Presidential Council recommended the establishment of a centralised SEO holding company, which was provided for in the National Enterprises Bill and Parliament recently.
This year in June, President Cyril Ramaphosa announced a big shift for the SOEs, dissolving the Ministry of Public Enterprises and moving the portfolio to the presidency.
He assigned the Minister in the Presidency responsible for Planning, Monitoring, and Evaluation, Maropene Ramokgopa, to finalise the bill.
Tlhakudi said the Bill needed to be better scrutinised.
He said the government was confused and would end up with a hybrid government shareholder model rather than “we had” when the Department of Public Enterprises was in existence.
He said this was not the centralised model that the Public Enterprises deputy director Advocate Melanchton Makobe said it was.
“The other SOEs that are deemed not fit to go into SAMSOC would be allowed to leech on departmental budgets as it happened previously. Is financial health the only criterion for deciding who gets into the SAMSOC? What about natural monopolies or regulated entities?” he said.
Meanwhile when reached, the Department spokesperson Ellis Mnyandu did not respond.
The state-owned companies that have been earmarked as strategic entities for transfer include Eskom, Transnet, SA Airways, SA Post Office, SA National Roads Agency, Denel, Air Traffic and Navigation Services Company, Airports Company SA, Broadband Infranco, Central Energy Fund, Sentech, SA Forestry Company, and SA Nuclear Energy Corporation.
These companies previously supervised by the now-dissolved public enterprises and would ultimately fall under their respective policy departments.
Those heading the departments would then act as shareholder representatives for SAMSOC.
The Parliament Portfolio Committee on Planning, Monitoring, and Evaluation said it was of the view that operational, financial, and governance challenges faced by these entities, exacerbated by issues of state capture and corruption, have significantly hindered their effectiveness.
This was after the Department of Planning, Monitoring, and Evaluation briefed the committee about the bill last week.
Some members of the committee indicated the potential for political bias and the undermining of independence were critical points of contention. However, the department assured the committee that the selection process would prioritise competence and experience, with a commitment to reducing political interference.
The committee’s chairperson, Teliswa Mgweba, said the role of Parliament in overseeing the SOEs was another focus of the question and answers. She said the committee expressed the need for clearly defined guidelines regarding Parliament’s authority to hold entities accountable.
The Department told the committee that the legislation would include provisions for regular reporting to parliament, enabling ongoing scrutiny of SOE performance and decision-making processes.
“Concerns about the implications of the draft legislation on the Public Finance Management Act (PFMA) were highlighted. The committee highlighted the potential risks of financial mismanagement. In response, the DPME clarified that essential PFMA principles would be retained within the new framework, ensuring that SOEs operate within established financial accountability guidelines,” Mgweba said.
The involvement of the Presidency in the governance of SEOs also sparked discussion about the balance of power and the potential for undue influence.
But the Department told the committee that while the Presidency would have a significant role in appointments and oversight, the legislation would safeguard the independence of SOE boards, with a focus on merit-based appointments.