Malusi Gigaba. Picture: BUSINESS DAY
Malusi Gigaba. Picture: BUSINESS DAY

The state has not ruled out selling its 39% stake in Telkom to bail out unprofitable South African Airways (SAA).

The Treasury is planning to introduce a special appropriations bill recommending a R10bn appropriation to the airline in 2017-18. The figure includes the R2.2bn bail-out the struggling airline received in June to help it repay loans to Standard Chartered bank.

The airline is engaged in tough negotiations with lenders whose R6.8bn debt matures in September, as it also wrestles with the prospect of being unable to pay salaries because of a severe cash crunch.

The saga of SAA’s financials poses a serious risk to the fiscus because the airline holds R19bn in government guarantees.

The state of affairs at SAA and its potential bail-out dominated proceedings during Deputy President Cyril Ramaphosa’s question-and-answer session in the National Assembly and a sitting of the standing committee on public accounts.

In the latest disclosure on Wednesday, the DA said in Parliament it was in possession of a secret Cabinet document showing that Finance Minister Malusi Gigaba was planning to give SAA a R10bn bail-out by selling the state’s shares in Telkom.

The government’s stake in Telkom is worth about R14bn.

It is understood Gigaba argued in the document that the sale of noncore assets was the only sustainable way to support SAA. In terms of the bail-out, SAA would use R6.8bn to repay its maturing debt and R750m towards working capital.

“Do you support the sale of a good asset to save a bad asset?” DA MP Alf Lees asked Ramaphosa in Parliament.

“We continue to discuss which assets are strategic and not strategic, and issues like that are always discussed by Cabinet and committees … if that proposition [selling the Telkom stake] comes up, Parliament will deal with it ,” said Ramaphosa.

In 2015, the government sold its 13.91% stake in Vodacom to the Public Investment Corporation to help fund the R23bn allocation to Eskom.

At the standing committee on public accounts, chairman Themba Godi bemoaned the lack of leadership at SAA. The committee was interested in work done by EY, “which appears to have captured SAA”.

SAA chairwoman Dudu Myeni said the recent appointment of a CEO had met one of the conditions laid down in June by lenders for the extension of R6.8bn in loans.

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