Review holding up restructuring of Denel

THE review of state-owned entities (SOEs) would determine how state arms manufacturer Denel should be restructured, and its transfer from the Department of Public Enterprises to the Defence Department.

Energy Minister Jeff Radebe said there was a process unfolding looking into the state of SOEs. “Right now there is a committee chaired by President (Cyril Ramaphosa) to look at the state of SOEs. We should await the outcomes of that process,” Radebe said.

He said this when he and Defence Minister Nosiviwe Mapisa-Nqakula last week presented the 2017 annual report of the national conventional arms control committee (NCACC) to the joint standing committee on defence.

This came after MPs had wanted to know about the delay in transferring Denel to defence when the NCACC annual report showed that exports of arms and weapons had declined from R4.1 billion in 2016 to R3.4bn.

The number of export permit contracts authorised had also declined, from 2 913 to 1 682 in the year under review.

The ANC’s Dumisani Gamede said export of heavy weapons was critical to the country’s economy.

Gamede also said Denel was in bad shape amid the decline in exports of weapons.

“At a certain stage it was reported that it was to be transferred to the Department of Defence. Some of us believe in that,” he said, before asking about the pending transfer of Denel to that department.

The DA’s Shahid Esau said the decline in exports of heavy equipment was causing a dent in revenue generation.

UDM leader Bantu Holomisa said the country was not marketing its products. “We have sophisticated technology. We need to change the tactics a little bit,” Holomisa said.

Mapisa-Nqakula said the 2016 report had painted a glowing picture about the defence industry, but Denel had since encountered problems.

“The problems have impacted on the rest of the industry, particularly small companies,” she said.

The minister said Denel has been living hand-to-mouth, as money received was spent on salaries instead of production of equipment for orders placed with the SOE.

“The situation has been so bad that it has impacted on the special defence account,” Mapisa-Nqakula said.

However, she said there was an intervention at Denel, with new board appointed and an acting chief executive in place.

Mapisa-Nqakula said the decision on the future of Denel lay with Ramaphosa.