‘We will place SOEs on a sound footing to serve all citizens’: Ramaphosa

28 June 2021 - 11:29
By nonkululeko njilo AND Nonkululeko Njilo
President Cyril Ramaphosa says his administration has embarked on reforms to change the face of embattled SOEs. File photo.
Image: ELMOND JIYANE / GCIS President Cyril Ramaphosa says his administration has embarked on reforms to change the face of embattled SOEs. File photo.

President Cyril Ramaphosa says his administration has embarked on reforms to change the face of embattled state-owned enterprises (SOEs) which have sought regular bailouts from government. 

They include Eskom, Transnet and the Passenger Rail Agency of SA (Prasa) all marred by allegations of state capture, financial mismanagement and inefficiency. 

“These SOEs should be at the forefront of economic and social transformation. They are responsible for providing the infrastructure and services on which the economy depends.

“That is why we have made it a priority of this government to turn these companies around, to root out corruption, to improve their governance and to enable them to play the role they should in driving economic growth and employment creation.”

The reforms sought to make the public sector more dynamic and an effective part of the economy, he said.

“To this end, we have embarked on reforms to strengthen these SOEs so they can produce the results the country needs and expects,” Ramaphosa wrote in his weekly newsletter on Monday.

The president defended the decision allowing private companies to generate their own electricity of up to 100MW.

“We have begun the process of restructuring Eskom into three different state-owned entities, responsible for generation, transmission and distribution respectively. This is because the previous structure of Eskom was ill-suited for a changing energy landscape. It had become inefficient and costly and was not sufficiently transparent,” he said. 

The move will mean Eskom will be able to purchase power from a broader range of providers, both private and public, ultimately improving transparency and competitiveness and aid the purchase of low cost electricity, according to Ramaphosa.   

He said the decision would also attract more private investment.

“This is vital at a time when the country is suffering from severe and sustained electricity shortages and where neither Eskom nor the state is able to invest in new generation capacity. Importantly, these reforms will give Eskom the space to address its financial and operational challenges.”

Ramaphosa admitted that though there had been a need for robust SOEs that will aid economic growth and transformation, different interventions were needed.   

“Given the number of SOEs and the differences between them, we are not applying a blanket policy to these reforms. An intervention that works for one SOE may not be appropriate for another, requiring a case-by-case approach.”

Last week the president announced the establishment of the National Ports Authority as an independent subsidiary of Transnet and part of government’s plans to reposition SOEs. He said this was crucial as Transnet plans to invest R100bn over the next five years in upgrading its infrastructure across the ports system.   

“This will make our ports more efficient and our exports more competitive, and benefit the entire economy. For the ordinary consumer, it will mean reduced prices in the long term for many of our goods. For our exporters, it will mean greater competitiveness in global markets.   

“As our exports grow, our economy will expand and create more jobs. More efficient ports will make the entire economy work better, and as port volumes increase, jobs will be created at the ports themselves,” he said. 

Ramaphosa said he was confident these reforms and others would assist SOEs to become efficient, profitable and sustainable.

“These reforms are important to ensure SOEs implement their broader developmental mandates to support all citizens and the economy.”

Though some worker unions have slammed some of the interventions, which they said would reduce the value of SOEs, Ramaphosa said the contrary was true.   

“As we undertake this process of transformation, we are committed to deepening our engagement with labour to ensure the voices of workers are heard in determining the future of these entities. 

“Our policy remains that SOEs must play a crucial developmental role in supporting the growth of our economy. Our task is to place them on a sound footing so they can serve their ultimate shareholders, the SA people.”