State bailouts for Sanral, SAA, SABC
● The state is planning a R59bn bailout of entities in financial distress, including the South African National Roads Agency Limited (Sanral), the South African Post Office, SAA and the SABC.
Well-placed government officials said the rescue plan was one of the key discussions at the cabinet lekgotla convened by President Cyril Ramaphosa in Pretoria this week.
It was argued strongly that the entities must be rescued to avoid them defaulting on loans or collapsing entirely.
In terms of a breakdown of the bailout package, Sanral will receive a cash injection as it cannot borrow further; the SABC, which is facing a massive cash crunch, will receive a guarantee allowing it to borrow; SAA will also get a guarantee; and the Post Office will be given cash as well as guarantees.
The Trans-Caledon Tunnel Authority is also due for an injection of funds as part of the rescue package.
It ran into financial problems last year after accumulating R3bn in debt, which affected its ability to pay its Lesotho Highlands Water Project debts.
But insiders said of particular concern at the lekgotla was the financial status of Sanral, whose debt has been piling up in the face of civil disobedience over the payment of e-tolls in Gauteng.
Sanral last year wrote off e-toll debts amounting to R3.6bn as Gauteng motorists simply refused to pay to use the roads upgraded under the Gauteng Freeway Improvement Project (GFIP).
A large chunk of the R59bn rescue package will go to Sanral, because if it defaulted on its debt repayments SA’s sovereign credit rating would suffer.
“It was inevitable,” said one insider who attended the lekgotla.
“If you don’t bail out Sanral, the GFIP will default. Once Sanral defaults it will cause a run and our sovereign debt will be in trouble.”
The insider said, however, that whatever money was allocated to Sanral to pay off its e-toll debt would have to be recovered from Gauteng province, which had benefited from the highway improvements. “If the National Treasury bails out the GFIP, the money will be recovered by lowering Gauteng’s equitable share allocations. That’s how the system works,” said the source.
Communications minister Nomvula Mokonyane, who is also the spokesperson for the cabinet, said it was premature to comment on discussions about a rescue package for state-owned entities as there was no final decision yet.
“The discussions of lekgotla get referred to a formal cabinet meeting and only then will we be able to share that kind of information. For now, there is nothing to communicate,” she said.
Treasury spokesperson Jabulani Sikhakhane said there was a separate process by which budget bids were evaluated for soundness and against what the state can afford based on available resources.
“Budget bids approved by the cabinet are announced in February when the minister of finance tables the budget in parliament, or in the adjustments budget announced during the tabling of the medium-term budget policy statement in October,” he said.
Sanral spokesperson Vusi Mona said the roads agency had made a request for financial assistance from the government through transport minister Blade Nzimande.
“Sanral did escalate, through the minister, the issue of GFIP and the challenges it is facing. We would expect that our minister would have taken it to the relevant political structures and platforms,” said Mona.
He said the freeway improvement project was in serious financial trouble, but not Sanral itself.
Mona acknowledged that the agency had “burnt its fingers” over its management of the e-toll debt.
The GFIP cost R17.9bn, which was largely financed through loans, and Sanral has been struggling to service the debts.
Mona would not say how much was still outstanding.
The matter has also become a political hot potato, with the DA and the EFF supporting those who refuse to pay e-tolls.
The ANC in Gauteng recently resolved at its provincial congress that e-tolls should be scrapped by the national government.
Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse, which has led the charge against e-tolls, said Sanral needed at least R2bn a year to service its GFIP debt.
The Post Office needs money to strengthen its software systems because it is taking over the social grants payment system from Cash Paymaster Services, while SAA has been crippled by mismanagement for years and has required regular bailouts.