We will get state-owned entities back into shape eventually, insists DPE

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Deputy Minister of Public Enterprises Phumulo Masualle.
Deputy Minister of Public Enterprises Phumulo Masualle.
  • Deputy Minister of Public Enterprises Phumulo Masualle has told Parliament that his department was working on improving the fortunes of SA's beleaguered SOEs.
  • Masualle was replying orally to questions from members of Parliament during a virtual plenary of the National Council of Provinces. 
  • Many are questioning the progress and commitment of government towards fixing SOEs. 

Deputy Minister of Public Enterprises Phumulo Masualle told Parliament on Tuesday afternoon that despite ongoing troubles at state-owned entities (SOEs) and delays in already announced plans to get them back in shape, the department still had a plan to improve the fortunes of beleaguered parastatals.

Masualle was replying orally to questions from members of Parliament during a virtual plenary of the National Council of Provinces. He was a stand-in during the plenary for Public Enterprises Minister Pravin Gordhan.

One of the sharpest criticisms levelled against government in recent years has been the mismanagement and financial ruin of state-owned companies and subsequent bailouts to these entities that have drained the fiscus of billions.

Upon arriving at the Department of Public Enterprises, Gordhan spearheaded the Shareholder Management Bill, which would give the minister more power to intervene in the operations and significant strategic decisions of parastatals, to prevent the state capture that targeted them before.

However, the process of the Bill has been stalled, leaving many to question the progress and commitment of government towards fixing SOEs. Besides that, Eskom is the sight of management infighting, Denel has struggled to pay salaries and South African Airways (SAA) is under business rescue.

Where is the Bill?

DA MP from the Eastern Cape Mlindi Nhanha asked why the department failed to propose the Shareholder Management Bill that it had promised it would do a few years ago. Masualle said the Bill was stalled to align it with President Cyril Ramaphosa's SOE Council.

"The approach to take up the Bill was embarked upon to align the Bill with [Ramaphosa's] SOE Council for the state-owned enterprises. The quotations have come in and attempts at advancing it were thwarted by the need to appoint boards and management, which took immediate priority," said Masualle.

Masualle said the department was in the process of adopting models to ensure legal frameworks, ownership clarity, the equitable treatment of the shareholder and ensuring that there is clarity in terms of the responsibilities of the board.

Dangers at Denel

EFF MP from the Western Cape Andrew Arnolds asked whether Denel, which has on numerous occasions failed to comply with a Labour Court order to pay employees, has any plans to do so and whether there are any other court cases pending against Denel.

"We are aware of such developments. The answer is yes, we have. We are aware of such and we have since ensured that there is an improvement in operations to make sure that salaries are paid. We have also prioritised investments that can lead to quick cash flows," Masualle said.

Masualle said the department and Denel were consulting labour on how to improve operations and capitalise on profitable operations to improve the financial state of the business to better position it to pay salaries.

"The matter has been in court and pled before management and the board. We are sympathetic and hope that all parties can resolve the matter so that there is a win-win situation. Where there is a case in which there has been wilful neglect, we have to take measures. In this instance, it's not been the case that management did not wish to pay," he said.

Masualle told MPs that management and boards at SOEs were in the process of guiding the entities away from ruin by cancelling contracts entered into under the state capture project and closely following the evidence presented in the Judicial Commission of Inquiry into State Capture chaired by Deputy Chief Justice Raymond Zondo.

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