Pravin Gordhan. Picture: GCIS
Pravin Gordhan. Picture: GCIS

The agents and architects of state capture are still in play and biding their time before they strike again, Public Enterprises Minister Pravin Gordhan says.

Speaking at the Nedbank Treasurer’s conference in Sandton on Thursday, Gordhan said: “The forces at the centre of state capture are not just walking away, they’re fighting back and trying to hold on to what they have and get rid of the good guys so they can win back that space and continue on with the kind of destruction in those state-owned entities.”

Gordhan is faced with the difficult task of restructuring SOEs, including South African Airways and Eskom, that have weighed heavily on the fiscus.

“We need to re-establish SOEs as important and dynamic role players in our economy,” Gordhan said.

Gordhan has changed the boards of key SOEs to root out corruption and the remnants of state capture.

“We need to look at business and operational models and the sustainability and feasibility of these models — this is our next task,” he said. “We are paying more than we should because of the patronage networks that began to occur.”

Gordhan referred to the changes made to the boards and the moves to restructure SOE finances, warning that state capture still posed a threat.

Citing Eskom as an example, Gordhan said: “It’s essential that the effects of state capture on Eskom be pushed back.” The power utility is locked in a dispute with labour unions representing thousands of its workers after saying it would not increase wages in 2018 due to financial difficulties.

Eskom had to stick to a 0% wage offer based on the challenging environment, including the contraction in economic growth in the first quarter, the government’s fiscal constraints and Eskom’s difficult financial position, Gordhan said.

In the past fiscal year, the fiscal deficit was more than one percentage point of GDP above the budget target as revenues underperformed, affected by low growth, and expenditure was pushed up by bail-out costs for SOEs.

While the Treasury’s return to fiscal consolidation in the 2018 budget was a move in the right direction, the IMF said on Tuesday that debt was still expected to rise in the medium term due to low growth.

Gordhan said first-quarter contraction in economic growth damped the hope and optimism of the first few months of 2018. “We have a difficult terrain to travel,” he said.