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Sona 2020: Load shedding to stay, SAA restructuring, & more plans for Prasa

Most political parties and analysts said they wanted the president to table a plan of action and stop making empty promises about the meltdowns at SOEs.

President Cyril Ramaphosa delivering the State of the Nation Address on 13 February 2020. Picture: GCIS

JOHANNESBURG – When his State of the Nation Address finally got under way almost two hours after it was meant to begin, President Cyril Ramaphosa’s speech on Thursday included much-anticipated plans for the country’s embattled state-owned entities (SOEs).

Most political parties and analysts said they wanted the president to table a plan of action and stop making empty promises about ailing SOEs.

With consistent load shedding throughout the country, major losses at South African Airways (SAA) and a flailing Passenger Rail Agency of South Africa, this is what Ramaphosa had about the struggling companies.

ESKOM

The power utility has been struggling to keep the lights on for months now, with the country seeing the implementation of load shedding stage 6 for the first time in December.

In his speech, Ramaphosa said load shedding had a dire impact on government’s efforts to create jobs and grow the country’s economy.

“At its core, load-shedding is the inevitable consequence of Eskom’s inability over many years – due to debt, lack of capacity and state capture – to service its power plants.”

He also admitted a reality that many had hoped he would find a resolution to instead.

“The reality that we will need to accept is that in order for Eskom to undertake the fundamental maintenance necessary to improve the reliability of supply, load-shedding will remain a possibility for the immediate future.”

In his previous Sona, the president announced that the utility would be split into three entities. This year, he said that was still the case, and steps were being taken to make sure that the process went smoothly.

Eskom’s financial woes were not an issue that went unnoticed.

“The social partners – trade unions, business, community and government – are committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner.”

Earlier on Thursday, the Public Investment Corporation (PIC) said that it was concerned about not being consulted regarding a proposed R250 billion bailout from its funds to assist Eskom.

Cosatu proposed a plan to use the pension money managed by the PIC to pay down some of Eskom’s debt in return for a range of undertakings by the government. It said about 7% of the R2.2-trillion managed by the PIC - together with contributions from the Industrial Development Corporation (IDC) and Development Bank of Southern Africa - should be invested in a special-purpose vehicle that would take on R250 billion of Eskom’s debt.

SAA

After being placed under business rescue last year, there has been no sign of success at SAA.

Earlier in February, the airline announced the cancellation of 48 local and international flights by the end of the month in order to cut costs and save money.

While the National Union of Metalworkers of South Africa believes there is a secret plan to cut jobs at the airline, Ramaphosa on Thursday said: “The business rescue practitioners are expected to unveil their plans for restructuring the airline in the next few weeks.”

He then acknowledged that it was essential that a future restructured airline was commercially and operationally sustainable and was not dependent on further government funding.

In January, the practitioners announced that the cash-strapped state carrier would receive R3.5 billion of emergency funding from the government-owned Development Bank of Southern Africa.

PRASA

When it comes to the country’s railways, the president said government’s key priority was to focus on fixing the rail system, which transports over one million commuters on a daily basis.

“The Central Line in the Western Cape and the Mabopane Line in Pretoria have been closed for essential refurbishment and upgrades. We are investing R1.4 billion in each of these lines to provide, a safe, reliable and affordable service.”

Just last week, lobby group Unite Behind took Transport Minister Fikile Mbalula to court over Prasa's leadership crisis.

Mbalula dissolved Prasa’s interim board and appointed a sole administrator in December. Unite Behind's court application seeks to overturn that appointment.

The group said it believed it was impossible for one person to be expected to fix the “tragic chaos” of the rail service.

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