Boards of SOEs must be strengthened, says Pravin Gordhan
11 July 2019 - 20:28 Claudi Mailovich
Pravin Gordhan. Picture: FREDDY MAVUNDA
Public enterprises minister Pravin Gordhan says the boards of Eskom and other state-owned enterprises have to be strengthened technically and financially.
In a dramatic Thursday for the public enterprises minister, he told parliament in his budget vote address that state capture had crippled state-owned enterprises.
His address, however, was disrupted by EFF MPs, who labeled him a “constitutional delinquent”. He was able to continue with his speech after the rowdy MPs were forced to leave parliament.
In separate comments Gordhan told the media that the board of Eskom and other entities needed to be strengthened, “both at a technical role in relation to the particular business they are involved in, but from a corporate finance and audit point of view as well”.
He said there were three vacancies on the Eskom board.
He also announced on Thursday evening that South African Airlines board chair JB Magwaza had resigned, just two months after the state-owned airline’s CEO Vuyani Jarana quit.
Gordhan said the utilities’ boards would be asked to review their business models and develop models appropriate to the conditions they faced.
The boards would also have to develop financial sustainability plans to ensure that SOE’s becomes self-reliant.
“In giving effect to its renewed efforts to turn around the SOEs, [the public enterprises department] will over the next six to eight months work with the boards of the SOEs to develop new operating models for their businesses, and develop a financial sustainability plan,” Gordhan said.
Gordhan said Eskom faced operational, financial and structural challenges. These were driven by “massive cost and time overruns on the new build programme, collapse in governance, unsustainable debt levels, under-investment and poor maintenance of plants, which has led to increased diesel usage that eroded Eskom’s cash position.”
