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As SA endures another round of enforced power cuts due to Eskom's problems with electricity generation, and there is a race against time to restructure SAA before it crashes and burns, President Cyril Ramaphosa has told South Africans that there is still hope in these companies.
“Despite the depth of current challenges, none of our state-owned enterprises (SOEs) is lost. They can all be saved. But it will take extraordinary effort and, in some cases, tough decisions,” Ramaphosa said on Monday
“We will not hesitate to do what it takes to return our SOEs to financial and operational health.”
Ramaphosa said in his regular Monday newsletter that when he visited Medupi power station for the first time two weeks ago, he was struck by how huge it is.
“In many ways, Medupi is a fitting symbol of the importance of our SOEs. The cost of building the power station has escalated dramatically since its building started, it is behind schedule and — with five of its six units now in commercial operation — it is not yet performing at the level it is expected to perform.
“The problems with the construction of Medupi, and its ‘twin’, Kusile, account for much of the financial crisis at Eskom. There have been other factors, of course, not least of which are the effects of state capture, corruption, loss and shortage of essential skills and mismanagement.
“And yet, Medupi is impressive. Once the work to correct the problems with its design and construction is complete, it is expected to contribute around 4,700MW into the national grid, producing enough power in a year to meet the electricity needs of more than one-million people.”
Ramaphosa said SA's major SOEs, despite having severe financial difficulties and operational problems, were great assets.
“We will not allow any of these strategic entities to fail.
“Rather, we need to take all necessary steps — even drastic ones — to restore them to health.”
Referring to last week's decision to place SAA into business rescue, he said: “There was no other viable and financially workable option for a credible future for the airline.”
“Business rescue is not the preferred option for fixing our SOEs, nor would it necessarily be advisable in other circumstances. But the resolve we have shown in putting SAA into business rescue cuts across all key SOEs. Whether it is Transnet or Eskom, Denel or Prasa, we are taking all necessary measures to turn them around.”
The government will ensure that SOE leadership “is fit for purpose”, is firm on accountability and consequence management, and will strengthen good governance practices, said the president.
“We are clear that the state will retain ownership of all those state-owned enterprises that are strategic ... Where necessary, and where appropriate, we will seek strategic equity partners to assist with raising capital, injecting skills and technology, and improving efficiency.”
Ramaphosa said that the government will continue with its interventions to tackle corruption that has crippled a number of SOEs.
“This work must necessarily continue until all corrupt activities have been uncovered and those responsible held to account before a court of law. Then financial systems must be strengthened and diligently observed so that no corruption is possible.”
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.