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Gordhan defends government's move to privatise cash-guzzling SAA

10 May 2022 - 17:50
Public enterprises minister Pravin Gordhan briefed parliament on the privatisation of SAA. File photo.
Public enterprises minister Pravin Gordhan briefed parliament on the privatisation of SAA. File photo.
Image: Reuters

Public enterprises minister Pravin Gordhan has defended the government’s decision to privatise SAA, saying it had become a drain on the fiscus having been continuously bailed out.

Gordhan, along with finance minister Enoch Godongwana, told the parliamentary standing committee on public accounts (Scopa) that the government had spent R49bn on SAA since 2006 in bailouts.

Also, the state-owned airline has not made profit since 2011.

These were some of the reasons justifying the government’s move to seek a strategic equity partner, Takatso Consortium.

Takatso Consortium is in the process of buying a 51% stake in SAA, and will provide an initial cash injection of R3bn as soon as due diligence is completed.

It is expected that as majority shareholder the consortium will inject more cash into the business for operational costs.

“There were  questions around whether there were justifiable reasons to dispose of SAA. Since when it was taken out of Transnet and became independent from 2007-8, it has cost the state to date R49bn. So there is no doubt that it’s a fiscal drain,” Godongwana said.

The EFF’s Veronica Mente questioned how, in the absence of financial audits, the government was able to determine how much SAA was worth and how Takatso was chosen as the strategic equity partner.

Gordhan said this was determined during the due diligence process in which Takatso looked into SAA’s books and vice versa.

“It is determined through the due diligence exercise that we performed on Takatso and Takatso performed on SAA and that was the basis upon which the numbers have been initially agreed. If anything changes then the final agreements will change as well,” Gordhan said.

There’s no need for innuendo of any kind
Public enterprises minister Pravin Gordhan

However, Gordhan's answer did not satisfy some members of the committee, who said there was no transparency around the deal.

Gordhan insisted that he had answered the questions and that the determination was made during the due diligence process “on both sides which resulted in the numbers being what they are”.

“And I’m not sure how much of what is being requested is within the mandate of Scopa and how much of it falls elsewhere within the parliamentary system,” he said.

Gordhan said that since the deal had not been concluded, some of the details the committee members wanted could not be disclosed, as it was commercial in nature and had to maintain its competitive edge.

“This is a commercial venture operating within a competitive environment. SAA in this particular transaction has to be careful about what is available to competitors and what is not. 

“At the same time we are cognisant that there will be maximum transparency as we reach different stages and, finally, at the conclusion of the process all of the necessary information that is not of a competitive nature will be made available to all interested parties.”

Mente said Gordhan’s responses were condescending and that the ministers could not come to the committee and patronise the members.

“We are called standing committee on public accounts and therefore anything that is funded by the public purse, we police it, irrespective of where it is. Siyangena (it is our business). So it must not bring any grey area, we know what we are doing.”

Gordhan said he took exception to this remark but promised to ensure that the department continued to account to parliament.

He insisted that at this stage some information could not be shared.

“This is a commercial transaction and within a commercial context some information will be very transparent and open right now, and when the process has concluded other information will be made available that is necessary to understand the transaction. 

“We cannot in any way compromise the competitive edge or position of SAA through this or any other process and as long as we have an understanding that those are the parameters within which we are working, I think there’s no need for innuendo of any kind.”

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