ACDP says Public Enterprises fraught with challenges

MEDIA RELEASE

Cheryllyn Dudley, MP and Whip

14 May 2013

ACDP says Public Enterprises fraught with challenges

·   so much is riding on the success of infrastructure development as SA aggressively takes hold of opportunities for economic growth!

·   massive rail infrastructure upgrade could reduce cost of doing business in SA

“To say Public Enterprises is fraught with challenges is an understatement I know – we just have to look at SAA, Alexkor and Denel - all singled out by treasury for poor performance.

Hon Minister, will court challenges and accusations that government bail-out’s for SAA to the tune of R11 billion plus a further R5 billion guarantee - are anticompetitive and have resulted in a number of commercial airlines shutting their doors - cause any drastic change in policy?

Statements by Treasury that: parastatals facing persistent financial difficulties will be urgently reviewed to establish sustainability - would be reassuring - only no-one believes any tough decisions will actually be taken.

State-owned entities are set to spend R397 billion over the next three years on infrastructure - 43% of the money sourced from debt markets and the remainder internally generated.  The ACDP recognises that so much is riding on the success of our infrastructure development - as South Africa attempts to aggressively create and take hold of opportunities for economic growth!

Eskom and Transnet - the largest contributors to the borrowing requirement - account for 87% of capital expenditure by parastatals.  Ongoing building of power generation plants and new transmission lines, investment in rail, ports and pipelines, large new water transfer schemes and airport upgrades – account for some of the spending.  We are seeing some bold moves that carry huge risk but we also understand we simply must pull it off!

Sentech and the SABC are also in line for large amounts to help pay for digital terrestrial television (DTT) migration - some of this being preparation for the 2014 African Nations Championship.

The ACDP congratulates Safcol on a 22% improvement in sales, an operating profit of R51million and plans to expand operations beyond South Africa and Mozambique - a great recovery from the previous year's R32million loss!  Safcol’s world-class forestry stewardship and management skills which can be shared with other African countries also offer opportunity for entry into the forestry industry in these countries.

Eskom, we understand, is reviewing the implications of the National Energy Regulator of SA's (NERSA) decision to grant it a lower than requested electricity tariff hike.  The16 percent increase asked for would have more than doubled the current price and the ACDP commends NERSA, who opted for an eight percent increase – a decision which went some way in softening the immediate impact on users.

We note Government’s resolve in pursuing nuclear options - seen as a critical driver of much needed industrialisation.   This controversial energy source will however take time - and lots of money - as safety and technology challenges rear their heads.

Transnet is spending heavily to revive South Africa's rail network and has signed an agreement with the China Development Bank - expected to yield a loan around US$5 billion (R45-billion) to help finance a massive rail infrastructure upgrade that could significantly reduce the cost of doing business in South Africa.

In the meantime 66 000 pensioners have instituted a civil claim to recover about R79 billion they claim Transnet has plundered from their pension funds – a potential liability which does not look good for the budget.

The ACDP will support this budget.”
-ENDS-

For more information contact Cheryllyn Dudley, MP, 082 890 6520 (SMS best for urgent response)

Media enquiries: Keeno Petersen, Media Liaison Officer, ACDP - Parliament, Tel: 021-403-3307 or Email:kpetersen@parliament.gov.za