Further funding on cards for Denel
Public enterprises minister Pravin Gordhan says the government will do everything possible to ensure arms manufacturer Denel does not collapse.
Amid a financial crisis in recent years, after the period of state capture, the state-owned enterprise (SOE) has struggled to pay salaries. Denel has received about R9bn in bailouts since 2019 but has continued to record losses, R463m in the nine months to December, according to Treasury data supplied to parliament last month.
No extra funding was provided for Denel in the 2024 budget, with finance minister Enoch Godongwana sticking to his “tough love” approach to SOEs and declining to release bailout money if they failed to meet Treasury conditions.
The Budget Review said that
R1.2bn of the R3.4bn appropriated in 2022 had been ring-fenced and would only be accessible once Denel had made progress with the implementation of its turnaround plan and future sustainability. So far it has drawn down R2.2bn of the package.
It was noted in the review that the company had not submitted its annual financial statements for the past three years.
In a wide-ranging interview on Thursday, Gordhan insisted the arms maker could recover.
“Denel has huge potential and there are discussions between the board and minister of finance with the focus on getting operations going again and producing things that they can sell.”
The details had not been ready before this year ’ s budget speech in February but a way forward would soon be announced, Gordhan said.
Business Day last week reported that Gordhan said he wanted to make his family and health his priority and would no longer be available to serve in the cabinet after the election. However, his name was on the ANC’s leaked list of candidates.
Gordhan said he was still “hard at work” on reforming SA s beleaguered SOEs and was
’On trying to wrap up what he could do before the election.
the national carrier, SAA,
Gordhan said all hope was not lost. “SAA was face down in the mud. In the next couple of weeks we will know if we have a deal,” he said.
Speculation is rife that the sale of SAA to a strategic equity partner could be in jeopardy as some government and ANC leaders seek a re-evaluation of the airline’s value and want the state to retain a majority stake.
Business Times reported yesterday there is a push in the cabinet and the ANC to review the deal after concerns that the strategic equity partner — Takatso — could be underpaying for an airline that has resumed flying and is opening new routes.
Uncertainty over the ownership of SAA could compound the shortage of alternatives, especially on domestic routes.
This follows a News24 report this week that Safair, which has captured 60% of the domestic air travel market, is under investigation and could be grounded for contravening licence conditions that require a majority local shareholding.
Gordhan, seen as close to President Cyril Ramaphosa, did not win enough popular support in the ANC to make it back to its national executive committee at the party’s national conference in 2022. However, he has remained a central part of Ramaphosa’s executive and expressed his confidence in whoever takes over from him.
“I will certainly be voting ANC. No-one is indispensable. The key is I am leaving behind teams of individuals to continue with the good work we started. Markets can adapt, they factor a change of guard into planning,” Gordhan said.