No plans to pri­va­tise

Aside from SAA, there doesn’t seem to be any con­crete in­tent to par­tially pri­va­tise or dis­ci­pline state-owned en­ter­prises

CityPress - - Business -

part­ner­ship with pub­lic en­ti­ties”.

The pro­gramme lets pri­vate com­pa­nies build so­lar and wind farms with guar­an­teed in­come for 20 years. Eskom has to buy their power at a pre-agreed tar­iff.

The tar­iff is set by a com­pet­i­tive bid­ding process in “win­dows”. At first, the prices Eskom got signed up for were very high, but they have been fall­ing.

The agree­ments signed thus far have added R200 bil­lion to Trea­sury’s long list of con­tin­gent li­a­bil­i­ties – amounts it might be called on to pay if things take a turn for the worse.

That is al­most as big as the li­a­bil­ity pre­sented by all the SOEs com­bined, but Trea­sury claims there is very lit­tle risk of it hav­ing to pay up on Eskom’s be­half. That’s be­cause the reg­u­la­tor, Nersa, “gen­er­ally ap­proves tar­iff in­creases that ac­com­mo­date th­ese agree­ments”, said the Bud­get Re­view.

It would take “sig­nif­i­cant de­te­ri­o­ra­tion in Eskom’s fi­nan­cial po­si­tion” to sad­dle govern­ment with the obli­ga­tion to buy all that so­lar and wind power.

Not only are the SOEs one of the de­ci­sive fac­tors that could lead to a credit down­grade to junk sta­tus, they are also the part of the pub­lic sec­tor that can least af­ford junk sta­tus.

Only about 11% of govern­ment debt is in for­eign cur­ren­cies and sub­ject to the po­ten­tial down­grade.

At the SOEs, for­eign cur­rency debts, how­ever, make up 39% of all debts. If the state gets down­graded, so do all the SOEs, as do the pri­vate banks and cor­po­ra­tions that sell bonds for dol­lars.

PHOTO: LUCKY NX­U­MALO

STATE OF EN­TI­TIES Pub­lic En­ter­prises Min­is­ter Lynne Brown. The min­is­ter said an equity part­ner at SAA was a dis­tinct pos­si­bil­ity

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