R520 billion down the SOE drain

Bailouts for cash-strapped South Africa’s state companies have cost taxpayers R456.5 billion over the past nine financial years, and the bill is set to rise to R520.6 billion by the end of March next year, according to the National Treasury.

The aid has been financed by increasing borrowing and cutting back on other budgetary allocations, with spending on infrastructure and essential goods and services the most impacted, the Treasury said in a presentation to lawmakers in Cape Town on Tuesday.

Power utility Eskom has received the bulk of the bailouts — it will have received a total of R496 billion by the end of the current financial year.

South African National Roads Agency has been allocated a total of R47 billion, and South African Airways, the national carrier, has R49 billion. Transnet, the state logistics company, requested R61 billion late last year. 

“Broad reforms are underway in energy, freight, water and telecommunications,” Rudzani Mandiwana, the Treasury’s chief director of asset and liability management, told lawmakers. “

It will take time to reverse the consequences of operational, maintenance and governance failures at SOCs responsible for electricity, rail and ports.”