Bold moves to turn around embattled parastatals Eskom, SAA and the SA Post Office are too little and too late, according to analysts.
To tighten its grip on the embattled SAA, Minister in the Presidency Jeff Radebe announced plans to place the national carrier’s political oversight with the National Treasury and Finance Ministry instead of the Public Enterprises Ministry.
The announcement followed a cabinet meeting on Wednesday on the three troubled entities.
Analysts said the problems that recently manifested in nationwide power cuts and a funding crisis at SAA have taken too long to fix to have any impact in the short term.
SAA has been unable to publish its financial statements for the year to March 31 while Eskom is struggling to carry out its core business of supplying electricity. It has now embarked on rolling blackouts for the first time since 2008.
The recent crises have raised fears that rating agencies may downgrade South Africa’s credit ratings, making it more expensive to borrow abroad.
Political analyst Dr Somadoda Fikeni said the solutions presented by Radebe signal to rating agencies that government views the crises as serious, but that it is reactive rather than proactive.
“It does not help much that we act when there are crises. We saw power cuts in 2008 and that is when government should have set up a strategy to deal with the problems.
“The general perception is that it takes a deep crisis for action to be taken. What is important to rating agencies is the general economic outlook.”
Energy analyst Chris Yelland said the proposals to rescue Eskom were positive and necessary, but would not have much short-term impact.
Yelland said problems had resulted from Eskom changing gas turbines to run on diesel years ago.
“For them to wake up now is way too late. It’s going to take several years to change the turbines back to gas because it will involve changing piping infrastructure and that is quite an involved process.
“We’ve known this was necessary for years. For them to take action now is a sign of deep failure at Eskom to do its work. It is a management failure,” said Yelland.
Deputy President Cyril Ramaphosa has been appointed by President Jacob Zuma to lead plans to turn around the fortunes of the three state-owned firms.
This will see Ramaphosa’s responsibilities in government increasing.
He currently leads mediation efforts in political problems in Lesotho, resolving problems in the tripartite alliance while remaining leader of government business in parliament.
“We may be overloading Ramaphosa with many responsibilities. But the business sector is more confident in his role because of his experience and he is viewed as the next president,” Fikeni said.
Radebe said the deputy president would watch the three public entities “like a hawk” as they craft plans to improve their efficiencies.
He said Ramaphosa would lead a team comprising the ministers of Public Enterprises, Energy, Finance, Telecommunications and Postal Services and parastatal managers.
Radebe said the idea was to allow the National Treasury to have close scrutiny of SAA’s dire financial status.
“So being transferred to the National Treasury, it will be closer to the action than it would be in the Department of Public Enterprises.”
The DA has welcomed the treasury’s takeover of SAA but reiterated its call for the national airline to be privatised.
“This is a positive development, and we call on Minister Nene to find practical solutions to the situation at SAA that will not require further bailouts from the state,” said the party’s public enterprises spokesman Natasha Michael.
This is not the first time a public entity has been brought under the control of the National Treasury.
A similar step was taken by the Thabo Mbeki administration in 2008 when the Land Bank teetered on the brink of collapse due to poor financial management. It has since returned to profitability.
Parastatal rescue plan
To tighten its grip on the embattled SAA, Minister in the Presidency Jeff Radebe announced plans to place the national carrier’s political oversight with the National Treasury and Finance Ministry instead of the Public Enterprises Ministry.
The announcement followed a cabinet meeting on Wednesday on the three troubled entities.
Analysts said the problems that recently manifested in nationwide power cuts and a funding crisis at SAA have taken too long to fix to have any impact in the short term.
SAA has been unable to publish its financial statements for the year to March 31 while Eskom is struggling to carry out its core business of supplying electricity. It has now embarked on rolling blackouts for the first time since 2008.
The recent crises have raised fears that rating agencies may downgrade South Africa’s credit ratings, making it more expensive to borrow abroad.
Political analyst Dr Somadoda Fikeni said the solutions presented by Radebe signal to rating agencies that government views the crises as serious, but that it is reactive rather than proactive.
“It does not help much that we act when there are crises. We saw power cuts in 2008 and that is when government should have set up a strategy to deal with the problems.
“The general perception is that it takes a deep crisis for action to be taken. What is important to rating agencies is the general economic outlook.”
Energy analyst Chris Yelland said the proposals to rescue Eskom were positive and necessary, but would not have much short-term impact.
Yelland said problems had resulted from Eskom changing gas turbines to run on diesel years ago.
“For them to wake up now is way too late. It’s going to take several years to change the turbines back to gas because it will involve changing piping infrastructure and that is quite an involved process.
“We’ve known this was necessary for years. For them to take action now is a sign of deep failure at Eskom to do its work. It is a management failure,” said Yelland.
Deputy President Cyril Ramaphosa has been appointed by President Jacob Zuma to lead plans to turn around the fortunes of the three state-owned firms.
This will see Ramaphosa’s responsibilities in government increasing.
He currently leads mediation efforts in political problems in Lesotho, resolving problems in the tripartite alliance while remaining leader of government business in parliament.
“We may be overloading Ramaphosa with many responsibilities. But the business sector is more confident in his role because of his experience and he is viewed as the next president,” Fikeni said.
Radebe said the deputy president would watch the three public entities “like a hawk” as they craft plans to improve their efficiencies.
He said Ramaphosa would lead a team comprising the ministers of Public Enterprises, Energy, Finance, Telecommunications and Postal Services and parastatal managers.
Radebe said the idea was to allow the National Treasury to have close scrutiny of SAA’s dire financial status.
“So being transferred to the National Treasury, it will be closer to the action than it would be in the Department of Public Enterprises.”
The DA has welcomed the treasury’s takeover of SAA but reiterated its call for the national airline to be privatised.
“This is a positive development, and we call on Minister Nene to find practical solutions to the situation at SAA that will not require further bailouts from the state,” said the party’s public enterprises spokesman Natasha Michael.
This is not the first time a public entity has been brought under the control of the National Treasury.
A similar step was taken by the Thabo Mbeki administration in 2008 when the Land Bank teetered on the brink of collapse due to poor financial management. It has since returned to profitability.
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