Medupi will become a key asset: President Cyril Ramaphosa's pledge to SA

“Despite the depth of current challenges, none of our state-owned enterprises is lost. They can all be saved.”

So says President Cyril Ramaphosa, while acknowledging: “But it will take extraordinary effort and, in some cases, tough decisions.”

He asserted: “We will not hesitate to do what it takes to return our SOEs to financial and operational health.”

Ramaphosa, in his regular Monday newsletter, issued as the country is enduring another round of enforced power cuts due to Eskom's problems with electricity generation, said 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 state-owned enterprises. 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 4,700 megawatts into the national grid, producing enough power in a year to meet the electricity needs of more than a million people.”

Ramaphosa said SA's suite of major SOEs, despite 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 SA Airways (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 state-owned enterprises, 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.”

Government will ensure that SOE leadership “is fit for purpose” and that is firm on accountability and consequence management, as well as 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 reasserted that government will continue with its interventions to tackle corruption that has crippled a number of state-owned companies. “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.”