Question NW792 to the Minister of Public Enterprises

Reply:

Before responding to the specific question raised, it is important to highlight the environment that the State-Owned Companies (SOCs) operated in:

a) All entities were affected by state capture;

b) The following had an impact on the SOCs:

1. financial and liquidity position;
2. increased operating costs;
3. technical impact on the operational performance
4. there was erosion of skills; and
5. boards were compromised

c) The entities began stabilising and recovering from the effects of state capture as the new administration started addressing the state capture;

d) No bail outs were provided to SOCs but rather capital invested in SOCs to put them on a path of sustainability; and

e) Since then, the SOCs have progressed towards sustainability.

With regard to South African Airways (SAA), the airline has for previous financial years been facing significant financial and operational challenges. This was partly due to several challenges which amongst others included, state capture and corruption. As a result, the airline was placed in business rescue by its Board, effective 6 December 2019 to enable a comprehensive restructuring of the company and its balance sheet to ensure that a viable, competitive, and sustainable airline emerges. Funding was provided as post commencement funding to enable operations to continue while the business rescue plan was being developed. This also enabled the repatriation of South African citizen stranded in other countries during the Covid-19 pandemic lock down in 2020. The business rescue plan was developed and the creditors adopted the business rescue plan on 14 July 2020. The airline was later restructured, staff rightsized, significant compromises reached with creditors and the business rescue was exited on 30 April 2021. The airline recommenced operations in September 2021. The summary of funding received from Government is shown below, according to SAA and the amounts are further explained by the Department below thereafter.

According to information received from SAA:

(a)(i) Since 2019, South African Airways (SAA), please note the following with regards to bailouts and dividends:

Year	Amounts are not Bailouts but rather Capital invested	Dividends
FY2019/20	R 5.5 billion	R nil
FY2020/21	R18.2 billion	R nil
FY2021/22	R 6.8 billion	R nil
FY2022/23	R 1.6 billion	R nil
FY2023/24	R 1 billion	R nil

Explanation of the numbers

Year	Amounts are not Bailouts but rather Capital invested	Broken down as	Purpose	Dividends
FY2019/20	R 5.5 billion	R2 billion	Working Capital	R nil
		R3.5 billion	Settle lenders bridging finance
FY2020/21	R18.2 billion	R2.2 billion	Settle Business Rescue (BR) post commencement finance	R nil
		R4.4 billion	Settle lenders legacy debt
		R3.6 billion	Settle DBSA BR post commencement finance
		R7.8 billion	Implement BR
FY2021/22	R 6.8 billion	R4.1 billion	Settle lenders legacy debt	R nil
		R2.7 billion	Restructure SAA subsidiaries
FY2022/23	R 1.6 billion	R1.6 billion	Settle lenders legacy debt	R nil
FY2023/24	R 1 billion	R1 billion	Implement BR	R nil

(ii) Dividends: Rnil

According to information received from Eskom:

(b)(i) Since May 2019, Eskom has received government support of R158.6 billion through the Special Appropriation Act of 2019 and R76 billion (which includes R13 billion expected to be received by the end of March 2024), in terms of the Eskom Debt Relief Act of 2023. The breakdown is listed below:

Financial year	Amount received, R billion	Applicable act
FY2020	49.0	Special Appropriation Act 2019
FY2021	56.0
FY2022	31.7
FY2023	21.9
Sub-total	158.6
FY2024	76	Eskom Debt Relief Act 2023
Total	234.6

It must be noted that these are not bailouts, but government support is required to mitigate the fact that the allowed revenue under the NERSA Multi-Year Price Determination (MYPD) allowable revenue theory is understated.

Annexure W3 of the 2023 Budget Speech, states that:

“The National Treasury recognises that debt relief alone will not return the utility to financial sustainability.

A key assumption considered in the debt-relief determination is the implementation of the

recent tariff increase approved by the Regulator (18.65 per cent in 2023/24 and 12.74 per cent in 2024/25). Without these increases, the debt-relief arrangement is not sustainable.

Outstanding municipal debt, which has grown from R58,5 billion in March 2023 to R74.5 billion in February 2024 (11 months), is a systemic challenge to the electricity industry as a whole.

The National Treasury is finalising a proposal to address this debt.”

(b)(ii) No dividends have been declared over the past five years.

According to information received from Transnet:

(c)(i) Transnet received an equity injection from government of R5,8 billion (Transnet issued

ordinary shares of 5 837 000 000 to government) in February 2023 per special

appropriation Bill 2022 allocation to accelerate the rehabilitation of longstanding

locomotives (R2,9 billion) and to cover losses/expenses incurred due to the KZN flood

damage in April 2022 (R2,9 billion).

(ii) Transnet has not paid out any dividends since May 2019.

According to information received from SAFCOL:

(d)(i) Nil (Zero) bailouts received by The South African Forestry Company SOC Limited and

(ii) R1 million (2022/23) dividend paid out over the past 5 years since May 2019.

According to information received from Alexkor:

(e)(i) No bailouts were received by Alexkor over the past 5 years;

(ii) Alexkor did not pay out any dividends over the past 5 years.

According to information received from Denel:

(f)(i) R9bn

(ii) Rnil

Remarks: Reply: Approved / Not Approved

Jacky Molisane P J Gordhan, MP

Acting Director-General Minister of Public Enterprises

Date: Date: