New Public Enterprises Minister Pravin Gordhan on Tuesday revealed that his immediate focus would be on revitalising state-owned entities (SOEs) and reversing the tide of state capture that has gripped key sectors of the economy.
The appointment of new boards at several public entities, including operational changes, was expected in the next three weeks, Gordhan told members of the Federation of Unions of South Africa (Fedusa) at a conference in Pretoria.
“It won’t be an easy task, nonetheless it is not impossible,” he said, adding that change was expected in state power utility Eskom following the appointment of a new board.
“There is a huge need to restructure the state entities to function in the public interest, not just to serve a few people,” said Gordhan.
The financial management of public enterprises such as Eskom, South African Airways and rail agency PRASA has been blamed for putting pressure on the fiscus, with billions of rands in guarantees extended to the entities to help them stay afloat.
“A good team at Eskom needs to assure South Africans that they would work to keep costs under control,” he said. “Given 3 to 6 months, we will begin to see some positive signs.”
Gordhan, who was named public enterprises minister on February 26, stressed that rooting out corruption and transforming state-owned enterprises was going to be a “tough ride”.
Treasury has issued R350bn in government guarantees to Eskom, of which over R200bn has been utilised, as the troubled state power utility has battled to rein in bulging operating costs.
The poor state of Eskom’s financial affairs has seen its long-term corporate rating downgraded by Moody’s in November to Ba3, a third notch below non-investment grade.
The ratings agency placed Eskom on review for a further downgrade.
Late last month rival ratings agency S&P downgraded Eskom’s long-term debt to ‘CCC+’, the seventh rung of non-investment grade, with a negative outlook.
Gordhan said he anticipated that those involved in state capture would try to “sabotage” efforts of reversing the damage and transforming the state.
“The damage is not something that happened overnight […] we are on a good wave in South Africa and it is possible to re-capture the state and re-orientate these institutions,” he said.
By Sibongile Khumalo for News24