Report pending as ailing Denel awaits transfer

PARLIAMENTARIANS have been advised to wait for the outcome of the review of state-owned entities (SOEs) before Denel can be transferred from the Public Enterprises Department to the Defence Department.

MPs wanted to know about the delay in the process when the National Conventional Arms Control Committee (NCACC) 2017 report showed arms and weapons exports declined from R4.1 billion recorded in 2016 to R3.4bn.

The number of export permit contracts authorised in the period also declined, from 2 913 to 1 682.

Defence Minister Nosiviwe Mapisa-Nqakula and Energy Minister Jeff Radebe last week presented the report to the joint standing committee on defence.

The ANC’s Dumisani Gamede said weapons exports were critical to the country’s economy.

He also said Denel was in bad shape.

The DA’s Shahid Esau said the exports decline was denting revenue.

UDM leader Bantu Holomisa said Denel was failing to market its products.

“We have sophisticated technology. We need to change tactics,” he said.

Radebe, the NCACC chairperson, said President Cyril Ramaphosa was chairing a separate committee into SOEs and that the outcome of that process should be waited upon.

Mapisa-Nqakula said that while the 2016 arms industry report had been glowing, Denel had since encountered problems, which affected the entire sector, particularly smaller players.

She said Denel was living “hand to mouth” as revenues went on salaries instead of manufacturing.

“The situation is so bad that it has impacted on the Special Defence Account,” Mapisa-Nqakula said.

She noted that state intervention was being made at Denel, with the appointment of a new board and acting chief executive.

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

“It is not going to take a day or two. It is going to be a process.”

She added that the transfer of Denel would still be a challenge while the SOE was costing taxpayers.

“There has to be due diligence undertaken and deadlines decided.”

Mapisa-Nqakula insisted it would not be advisable to maintain Denel’s current structure and the way money was spent on its subsidiaries’ chief executives. “This is just one matter to be considered.”