Mini-budget: Transnet, Sanral and Denel get lifelines

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Finance MInister Enoch Godongwana on Wednesday announced bailouts for South African National Roads Agency Limited (Sanral), Transnet and Denel, by way of a special appropriations bill that will see more than R30-billion flowing to the struggling state-owned entities.

He offered no such reprieve for other struggling parastatals, with the major exception of a plan to take over between a third and two-thirds of Eskom’s debt that will be announced in the new year.

Godongwana said in his medium-term budget policy statement that Transnet would receive R2.9-billion to ensure the return to service of part of its locomotive fleet, and a further R2.9-billion, this time drawn from adjustments in in-year spending, to deal with flood damage to its infrastructure in eThekwini.

The minister justified the cost at a media briefing shortly before his speech in parliament, saying it was cheaper than doing nothing to resolve the woes of the freight logistics company.

“The loss of performance exceeds the cost of the investment,” he said, adding that Transnet’s coal line capacity was about 81-million tonnes, yet it was delivering only 15-million at the moment.

He said the treasury was using part of the windfall in higher-than-expected revenues in the current financial year to reduce risks to Transnet, Sanral and Denel but cautioned that the special allocations were a once-off event and could not be used to fund baseline increases.

“These allocations will allow these entities to adjust their business models and restore their long-term viability.”

Sanral’s debt of R47-billion will be shared between the treasury and the Gauteng government, in a 70% 30% split to unblock the impasse surrounding the Gauteng Freeway Improvement Project.  Of that sum, R23.7-million is maturing imminently and will be covered by the national fiscus.

It would be disbursed “on strict conditions”, he added.

Godongwana said the uncertainty about the Gauteng Freeway Improvement Project had proved a stumbling block for road construction and a way around it had to be found.

“We need to move on from the debates of previous years and find solutions to this challenge.”

Denel will receive R3.4-billion to support recent progress made to stabilise the arms parastatal.

In the February budget, the minister gave the arms manufacturer R122-million to meet its debt obligations, after giving it a cash injection of R2.923-billion in the October medium-term budget policy review after it defaulted.

Denel was devastated by state capture and last year saw its bonds suspended by the JSE recently after delaying interest payments on two notes, though the state has over the past two years stepped in to slash its debt from R3-billion to R290-million.

Godongwana made no special allowance for the Post Office, the South African Broadcasting Corporation, the Land Bank or SAA in a medium-term budget focused on preserving fiscal buffers in a turbulent global climate.