Financial support for SOEs conditional on progress, says Tito Mboweni

Financial support for struggling state-owned entities (SOEs) such as the SABC, Denel and SAA will be released in chunks as certain conditions are met, finance minister Tito Mboweni said in the National Assembly on Tuesday.

There had to be progress in these organisations before the government would grant them funds, Mboweni said, adding that chief restructuring officers would be announced for each of these entities on Wednesday.

These chief restructuring officers would work with the management of these companies to get them back on track.

Summing up the debate on the Appropriations Bill, the finance minister said the allocations would be made from the contingency reserve, which was increased by R6bn to R13bn in the February budget so government could respond to requests for fiscal support from SOEs.

Mboweni said the Treasury would only be in a position to use the contingency reserve once the Appropriations Bill had been adopted by parliament.

Additional funds would be raised by selling noncore assets. 

The SABC, which is the main source of news and commentary for most South Africans, is on the verge of collapse and has warned that it could be forced to go off the air unless the government quickly comes to its rescue. It has requested a R3.2bn government guarantee to stay afloat

Though Mboweni declined to grant the SABC the guarantee, he previously said in a letter that he recognised the immediate need for the public broadcaster to be given some form of assistance.

Meanwhile, Denel has told employees that it remains at risk of not being able to pay salaries for July.

In June, the state arms manufacturer said it could only pay 85% of salaries for June due to cash-flow problems. Soon after that public enterprise minister Pravin Gordhan announced that a lender had come to the arms manufacturer's assistance and full salaries were paid.

It then emerged that staff at Denel had been paid their salaries, but not their pension contributions.

Denel has asked the government for a R2.8bn cash injection.

On Monday, the company said group CEO Danie du Toit had indicated to employees that Denel was in continuous talks with the banks to secure bridging finance to support it.

ensorl@businesslive.co.za