Treasury to push for more SAA funds

• Special appropriations bill for R10bn will be submitted to Parliament before end-September, says director-general

The Treasury planned to submit a special appropriations bill for R10bn to Parliament before the end of September to provide South African Airways with the necessary capital to continue operating and to enable it to repay loans, director-general Dondo Mogajane said on Wednesday.

The Treasury planned to submit a special appropriations bill for R10bn to Parliament before the end of September to provide South African Airways (SAA) with the necessary capital to continue operating and to enable it to repay loans, director-general Dondo Mogajane said on Wednesday.

It would form part of the R13bn that the airline says it needs as a recapitalisation over the next three years.

At a meeting of Parliament’s standing committee on finance on Wednesday, it emerged that the bankrupt airline will need R2.4bn in working capital until the end of March 2018. The Treasury also needs to regularise the payment of R2.2bn for Standard Chartered Bank made after it refused to roll over its loan to SAA in June.

An additional amount might be required before the end of September to repay part of the R6.8bn in loans maturing then.

Citibank had indicated it did not want to roll over its R1.8bn loan, but Mogajane told MPs that negotiations with the bank and other lenders were continuing to get the loans extended. Citibank could agree to take a part payment and roll over part of the loan, he said.

Some lenders were willing to roll over their loans, but others wanted to be paid.

Mogajane warned of the danger of SAA defaulting on any of its loans as this would trigger cross-defaults for loans to other state-owned firms, which would also have to be paid.

An urgent special appropriations bill will be required as a short-term measure ahead of the additional appropriations made in the medium-term budget policy statement, which will only be tabled by Finance Minister Malusi Gigaba on October 25. After that, the appropriations bill will have to be adopted by Parliament.

Parliament will be in recess from Monday for two weeks, so the urgent need for funds will require a special sitting.

Mogajane said the Treasury would appeal for a special sitting, given the urgency of the situation. DA deputy finance spokesman Alf Lees said that the situation was a crisis.

The Treasury was still in negotiations with lenders two weeks before the deadline, with no clarity on the way forward and was planning to push through a special appropriations bill at very short notice. “It is just shocking,” he said.

Meanwhile, the committee has called on the executive to fix the matter of the extension of SAA board chairwoman Dudu Myeni’s contract.

The proper process was not followed in extending her contract as the Cabinet had not approved it as required. It also appeared the extension was in contravention of the SAA memorandum of incorporation.

The contract was extended last year for a further year, which ended on August 31. It was then extended until the annual meeting takes place.

Gigaba told the committee he had sought legal advice before extending the contract and would do so again in the light of the committee’s decision.