Struggling SOEs have used 70% of guarantees extended to them by govt

Finance Minister Nhlanhla Nene has revealed that the Post Office, Denel and SA Express all require additional assistance from Treasury in this financial year.

FILE: Nhlanhla Nene. Picture: GCIS.

CAPE TOWN - Struggling state-owned enterprises (SOEs) have used 70% of the guarantees extended to them by government.

Finance Minister Nhlanhla Nene has revealed that the Post Office, Denel and SA Express all require additional assistance from Treasury in this financial year.

It's already approved a further R1.74 billion guarantee for SA Express which is currently trying to return all its aircraft to the skies after being grounded in May.

While the guarantees allow state-owned companies easier access to funding, or to borrow at lower cost - they place significant risk on state coffers, should they default.

In a written Parliamentary reply to the Democratic Alliance, Finance Minister Nhlanhla Nene says government guarantees to state-owned companies at the end of March stood at R462 billion.

This amount excludes R1 billion approved for Denel in May.

Treasury is also considering whether to roll over an existing R2.43 billion guarantee and the company now wants to increase their guarantee by another R1 billion.

The Post Office is also looking for more help. It currently has a R400 million guarantee from government.

Nene says Treasury is still considering whether to agree to a request for another R2.7 billion.

Eskom has, by far, the biggest chunk of government support in the amount of R350 billion.

The boards of Denel and SA Express both told Parliament last week that they will struggle to keep the entities afloat without further government assistance.