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Gordhan steps up to the plate at Public Enterprises

Finance Minister Pravin Gordhan is now at the helm of Public Enterprises, although only six state-owned institutions fall under his direction.

FILE: Pravin Gordhan.  Picture: EWN

CAPE TOWN - Public Enterprises Minister Pravin Gordhan will deliver his budget vote in parliament, with all eyes on state-owned institutions, their management, and their role in the nation’s economy.

Government sees state-owned companies as crucial to driving its objectives to create jobs and drive economic growth.

But in reality, they are a major drain on state coffers.

Most of them regularly make headlines for all the wrong reasons - either drowning in debt, with serious liquidity challenges and more recently, embroiled in allegations of state capture.

Government recognises that without rigorous reform to their business models, the long-term survival of these institutions is in doubt.

Cyril Ramaphosa’s presidency has led to a change of guard at the Department of Public Enterprises - former Finance Minister Pravin Gordhan is now at the helm, although only six of the companies fall under his direction.

Ramaphosa stepped in himself in January to appoint a new board at the country’s beleaguered power utility.

As part of his pledge to root out corruption and to return stolen money to state coffers, he’s also ordered the Special Investigating Unit to conduct wide-sweeping investigations into Eskom and Transnet.

But Gordhan’s also started cracking the whip.

He told Parliament earlier this month that he was getting a legal opinion on whether illegal contracts at parastatals could be reversed.

Gordhan is also considering so-called “step-in-rights” to allow government as the major shareholder to take control where boards are failing.

He says it’s important not only to put fresh faces on the boards, but also to get money back where it has been stolen.

Lifestyle audits are also on the cards for executives perceived to be living beyond their means.

Gordhan’s already got the ball rolling at Denel, where a new board has been appointed to address the liquidity problems at the armaments company that last year threatened the payment of salaries.

Despite cash flow problems, Denel has still turned a profit over the past two financial years of over R300 million a year.

To enhance revenue generation, Denel will be focussing on more lucrative contracts and expanding its export base.

Eskom, however, is expected to suffer another major loss this financial year - almost double that of the last financial year.

Net loss after tax is estimated at R15 billion, with depreciation and finance costs expected to escalate as new power stations are completed, and new loans are raised for its build programme.

While Transnet has been able to deliver impressive financials with increasing profits in recent years, it’s still dogged by bad contract management and allegations of dodgy tender awards.

Board chairperson Linda Mabaso and two others resigned on the eve of a meeting Gordhan was due to have with the board.

Just a day earlier he told MPs that he believed the board had deliberately avoided acting against executives fingered of wrongdoing in a legal report that had cost the freight company R18 million.

On Monday night, Gordhan announced that he had removed the remaining board members and had installed an interim board to be led by Popo Molefe.

Molefe has previously chaired the Prasa board and won a court challenge last year against the board's removal by former Transport Minister Dipuo Peters.

While dodgy contracts are now subject to an SIU investigation, Parliament’s Public Enterprises Committee has asked for permission from Speaker Baleka Mbete to start probing state capture allegations at Transnet as it has been doing with Eskom.

Another of the problems under Gordhan’s watch is regional feeder airline SAA Express.

It’s been unable to convince the Auditor-General that it is a going concern, causing delays to the finalisation of its audited statements for 2016/17.

In January, airline executives told Parliament that uncertainty over whether it would be merged with SAA and Mango had affected a turnaround plan.

Earlier this month, Gordhan told Parliament that a possible merger was still up for debate.

The Department of Public Enterprises has seconded one of its directors, Matsiesi Mokholo, to act as chief executive officer.

But Gordhan has said that the airline is still experiencing problems with grounded aircraft, and rampant graft in its procurement department.

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