At the World Economic Forum (WEF) Meeting in Davos, Switzerland, Santa Clause seems to have forgotten to go home to the Northpole and Cyril Ramaphosa might as well give up his path of logic and prosperity. The South African Treasury, represented by Minister Nhlanhla Nene announced ahead of his Budget Speech 2015 further cash injections in two of the South African ailing and incompetent parastatals, ESKOM and SAA.
Eskom’s support will reach the troubled state-owned power company as early as June, a finance ministry spokesman said. Finance Minister Nhlanhla Nene said in October that the government would sell “non-essential assets” to raise R20-billion for Eskom, which urgently needs about R250-billion to upgrade its ageing infrastructure. “National Treasury has already identified a viable strategy to raise the required amount of funding that could be executed,” Treasury spokesman Jabulani Sikhakhane said, confirming a Bloomberg report based on an interview with Nene in Davos, Switzerland.
“Due to the commercial sensitivities involved, we cannot provide details. However, the process is proceeding to plan,” he added. Nene told Bloomberg TV at the World Economic Forum in Davos that the government had identified assets to sell and the first cash injection of R10-billion was expected by about June. The Treasury has said it will give details on the sales in the national budget review next month. Sources told Reuters last month the government was considering relinquishing shares of firms such as mobile operator Vodacom and fixed-line provider Telkom.
Meanwhile, the Treasury has approved an additional loan guarantee of R6.488-billion for SAA, the department said yesterday. The latest guarantee takes the total guarantees given to SAA to R14.4-billion to help turn around the loss-making carrier. The guarantees were granted on condition that the airline provides details of a comprehensive 90-day rescue plan within a month, the Treasury said. SAA should also cut operating costs and strengthen governance, internal controls and working capital management, the Treasury added.
In October, the government said it would consider a strategic partner for SAA. The airline said last year that it was finalising plans to replace up to 30 planes in a long-haul fleet upgrade.