The National Treasury has received requests for an SOE bailout package from the SABC, Acsa, Denel, Eskom and the Post Office. The burden of these bailouts will fall on South African taxpayers, following a familiar pattern to the billions that they’ve had to fork out previously.
The various entities have requested billions of rands in funding from the taxpayer to help them weather the coronavirus storm, says the National Treasury, as reported by Times LIVE.
The SABC has, according to the Treasury, “indicated” that there will be a net revenue loss of R1.5 billion for the 2020/21 financial year, as a result of the COVID-19 pandemic’s adverse effect on the revue streams for the state broadcaster. They also claim that shifting their programming schedule to make room for covering current affairs and numerous public service announcements has affected their advertising revenues.
“The SABC has confirmed it is requesting R1.5bn in support,” the Treasury said. The Treasury also assured taxpayers that the SOE will be prioritising and fast-tracking revenue-enhancing initiatives in order to weather future effects of the COVID-19 pandemic. This includes restructuring its sales teams, the introduction of additional revenue lines, partnerships, and a move into digital platforms for the distribution of its content. The Treasury has said that the SABC is reporting a preliminary loss of R489 million for the financial year ending in March this year and that numerous staff will be retrenched to cover future losses. “The SABC will have to reduce its staff complement if it wants to be sustainable. This will require the support of its shareholder,” the Treasury said.
Meanwhile, Airports Company SA (Acsa) has requested a R3.5 billion guarantee for a three-year period to cover for the financial devastation that COVID-19 has inflicted upon the aviation industry.
“Acsa will be unable to repay the guaranteed debt without an injection from shareholders and has thus applied for an R3.5bn equity injection for 2020/21,” the Treasury said. “Loss of revenue has resulted in losses of R492m in June 2020, whereas profits of R380m were generated in June 2019.”
This means that the R304 million generated by Acsa in June was 83% below the figures for June last year. Acsa bosses have also indicated that there will be R5 billion in cumulative losses for 2020 and medium-term frameworks indicate it could rise to R10.2 billion by 2025/26.
Taxpayers will also have to cover for the effects of COVID-19 on the state-owned aerospace and military technology conglomerate, Denel. However, Denel is not requesting additional funding at this point, but rather to be exempt from repaying government debt totalling R504 million. Its ability to to honour financial obligations as operations have come to a standstill, includes payment of salaries, creditors, statutory payments (medical aid, tax, UIF) and debt payments. Their interest payments under guaranteed debt totalled R3.415 billion.
“Failure to meet financial obligations has resulted in labour unions taking the entity to court for unpaid salaries. Denel still faces the risk of being placed in business rescue or even liquidation,” the Treasury said.
The Post Office has requested R4.9 billion to restructure and repurpose itself in order to avoid collapsing.
“R2.7bn is required for operations, R1.4bn in liabilities owed to Postbank, R300m for voluntary severance packages and R525m for other liabilities. Government must decide whether the Post Office has a role to play as a delivery arm to government. If not, it must be drastically restructured as the entity will not be able to continue in its current form without yearly funding from [the taxpayer] to cover its losses,” the Treasury said.
“Revised financial targets for the 2020/21 financial year indicate a net loss of R2.1bn is projected for the year compared to the initial budget for the year of a loss of R177m,” the Treasury warned.
Outside of these entities, the treasury has guaranteed billions more in bailouts, including R454 billion in debt owed by Eskom. Last year, South African Airways (SAA) was put under business rescue due to its inability to pay its debts and poor performance.
While taxpayers are bearing the brunt of the COVID-19 outbreak in their personal capacity, there is bound to be a backlash from the SOE bailout, because it follows a long-lasting trend of abysmal performances from these businesses, much of which is tied to corruption in the country.