No plans to privatise
Aside from SAA, there doesn’t seem to be any concrete intent to partially privatise or discipline state-owned enterprises
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.
STATE OF ENTITIES Public Enterprises Minister Lynne Brown. The minister said an equity partner at SAA was a distinct possibility