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PARASTATALS

On several occasions, President Cyril Ramaphosa has shared his concern that many state-owned enterprises (SOEs) are experiencing severe financial, operational and governance challenges. He said that his government will intervene decisively to stabilise and revitalise SOEs.

  • SOEs with structural problems, causing insufficient revenue streams to fund their operational costs, will no longer be able to borrow their way out of financial difficulties.
  • The funding model of SOEs will be reviewed in consultation with all stakeholders
  • The way that SOE boards are appointed will be changed so that only people with expertise, experience and integrity serve in these positions, Ramaphosa said in his State of the Nation Address. Board members will be removed from any role in procurement and the Auditor-General will advise on how to strengthen the external audit processes of SOEs.
  • Work on the broad architecture of SOEs will continue to achieve better coordination, oversight and sustainability.

“We will soon be completing work on a new centralised-ownership model that will allow for better strategic alignment, improved coordination and more effective oversight. It is proposed that this includes a state-owned company coordinating council [that] will be chaired by the president, responsible for high-level strategic direction,” Ramaphosa said, responding to the SONA debate.

“A new ownership model will incorporate new methods for funding SOEs, which could include a shift toward a greater mix of debt and equity finance. Where circumstances are suitable and where the developmental function of an SOE is not compromised, there may be opportunities to involve strategic equity partners as minority investors in some of our SOEs.”


UPDATES:

Eskom

May 17, 2018: Eskom freezes bonuses, pay hikes, external positions ✅

Eskom says that any internal job transfers that take place within the power utility will not include a salary increase.

This is in tandem with remarks from Eskom’s leadership earlier that vacant lower positions would be frozen and that there would be a moratorium on bonuses and increases.

In the statement, Eskom says internal job advertisements are geared towards recruiting staff within the organisation for available posts across all its business units and departments.

May 17, 2018: Eskom continues with nuclear preparations ❌

Eskom continues with front-end planning for a nuclear build programme, Loyiso Tyabashe, senior manager of nuclear new build at Eskom, says at African Utility Week.

During a discussion on nuclear energy, Professor Anton Eberhard of the University of Cape Town asks Tyabashe why Eskom is still focusing on nuclear development when it does not seem to be on President Cyril Ramaphosa’s radar.

Tyabashe responds that, although the Integrated Resource Plan (IRP) is being reviewed with the aim of being finalised in August this year, Eskom remains the designated owner and operator of any nuclear development.

“Those responsibilities mean we have to get ready for nuclear. We cannot just wait and see if nuclear is part of the reviewed IRP or not,” explains Tyabashe.

April 25, 2018: Eskom top execs in Washington to try win over investors, lenders ✅

Eskom’s top leadership is in Washington to address concerns investors and lenders have about the cash-strapped power utility, Parliament’s oversight committee on appropriations hears.

Interim group chief executive officer Phakamani Hadebe, chief financial officer Calib Cassim and chairperson of the board Jabu Mabuza are part of the team that has travelled to the US that and win over investors and banks.

April 11, 2018: SA takes first step in Eskom finance-company sale ✅

Eskom’s mortgage unit may be sold after National Treasury began a pre-qualification process for bids, marking a first step in efforts by the power utility to sell assets and stabilise its financial situation.

April 6, 2018: Ramaphosa refers Eskom allegations to Special Investigations Unit 

President Cyril Ramaphosa refers allegations of mismanagement and graft at state power utility Eskom and rail and ports group Transnet to the Special Investigating Unit.

The SIU, which probes corruption and maladministration in the government, must include “any alleged serious maladministration in connection with the affairs of the institutions,” in its investigations, Ramaphosa says in an order published in the Government Gazette.

April 4, 2018: Jeff Radebe signs R56bn contract with renewable power producers 

Energy Minister Jeff Radebe signs a R56bn contract, expected to add 2 300 MW of electricity to the national grid over the next five years, with 27 independent renewable energy power producers.

The 27 new projects is the biggest IPP procurement by the department to date, representing a total of R56bn investment.

March 28, 2018: Moody’s downgrades Eskom Holdings 

Eskom Holdings has its credit rating downgraded by Moody’s Investors Service, which cites a lack of clarity regarding the South African power utility’s plans to stabilise its finances.

Eskom’s long-term corporate family rating was downgraded to B2 from B1. B2 is the fifth rung of sub-investment grade debt.

March 19, 2018: Eskom slaps whistle-blower Suzanne Daniels with fresh charges 

Eskom blocks whistle-blower Suzanne Daniels’s return to work, and slaps her with fresh charges of “serious misconduct”.

The decision comes after the Commission for Conciliation, Mediation and Arbitration (CCMA) declared her previous suspension as “unfair”.

The power utility says the new charges stem from a 2017 matter, which were not covered in the recent CCMA ruling.

January 20, 2018: New Eskom board appointed 

Ramaphosa announces a new board for Eskom headed by Telkom chairperson Jabu Mabuza, as part of a host of measures to stabilise management at the power utility.

Former Land Bank CEO and Absa Capital executive Phakamani Hadebe is appointed the new acting group CEO.

The government also recommended that the board appoint a permanent CEO and CFO within the next three months.

Former acting CEO Matshela Koko and suspended CFO Anoj Singh – both implicated in state capture – are removed immediately.


SAA

May 17, 2018: Still no answers about SAA funding ❌

National Treasury says the recapitalisation of South African Airways is a matter that is still being finalised through the work of an oversight forum.

In a written response to Fin24 about a possible cash injection of R21.7bn for the national carrier, Treasury funding of SAA’s turnaround strategy will require an acceptable mixture of debt and equity, and this matter is being finalised as part of the work of the Oversight Forum between SAA and National Treasury.

April 25, 2018: Oversight forum to have SAA fund own operations by 2021

South African Airways tells Parliament’s Standing Committee on Appropriations that it hopes that its planned oversight forum in partnership with National Treasury will see the once troubled national carrier breaking even and funding its own operations by the year 2021.

Deputy Minister of Finance Mondli Gungubele says that the recovery for SAA has been well considered by both the new board and National Treasury. He says the forum would consider SAA’s capital structure and funding model over the next six months.


Transnet

May 14, 2018: Popo Molefe appointed interim Transnet chair ✅

Minister of Public Enterprises Pravin Gordhan appoints ANC veteran Popo Molefe as interim chairperson of Transnet. Molefe previously chaired the Passenger Rail Agency of South Africa (Prasa).

Five interim members is also appointed. They are Louis Zeuner, Ramasela Ganda, Ursula Fikelepi, Edward Kieswetter and Dimakatso Matshog.

May 3, 2018: Transet chair and directors resign ✅

Minister of Public Enterprises Pravin Gordhan announces the resignation of Transnet chairperson Linda Mabaso, as well as that of non-executive directors Vusi Nkonyane and Yasmin Forbes. New appointments to the board will be announced soon, says Gordhan.

April 19, 2018: Transnet CFO Garry Pita resigns ✅

Transnet announces the resignation of its chief financial officer Garry Pita.

“Mr Pita rendered his resignation after 12 years in service at Transnet,” the group says in a statement.

Pita joined Transnet in 2006. He was appointed as the group’s CFO in February 2016, after serving as executive director since October 2015. Before being appointed CFO in February 2016, Pita was Transnet’s chief procurement officer.

In 2016, Pita signed off on invoices authorising Transnet to pay R74m to Trillian Capital Partners for work done between February 2016 and June 2016. Trillian Capital Partners formed part of the Trillian Group, whose sole director Salim Essa is a known Gupta confidant and business associate.


Prasa

April 14, 2018: Changes made to Prasa board

Minister of Transport Blade Nzimande appoints an interim board at Passenger Rail Agency of South Africa to serve for a 12-month period.

Businesswoman Khanyisile Kweyama is the new interim chair.

Nzimande says in a statement that the country has been through changes which offer “great opportunities for renewal, revitalisation and progress”.

“As espoused by President Cyril Ramaphosa during the State of the Nation Address, the Department of Transport, subscribes to this renewal project,” he says.


Denel

April 9, 2018: New interim board announced for Denel ✅

Public Enterprises Minister Pravin Gordhan announces the appointment of a new interim board for Denel after meeting with the state-owned defence company.

“The changing of the board is the first step we are taking as governance,” he says.

The new chairperson of the board is Monhla Hlahla, the former CEO of Acsa and a non-executive director of various South African companies. No members of the previous board were retained.


February 26, 2018: Gordhan takes charge of SOEs 

Ramaphosa appoints former finance minister Pravin Gordhan as Minister of Public Enterprises, removing Lynne Browne from the position. Browne leaves the portfolio under a cloud of suspicion for her involvement in state capture.