South Africa’s private sector at the fourth State-Owned Enterprises (SOEs) conference this week pledged to work together with the government to solve South Africa’s infrastructure needs.
Thuli Zulu, the divisional executive for client coverage at Nedbank, said that infrastructure development was “a shared responsibility” as the government no longer had the capacity to invest heavily in infrastructure as its debt had risen from less than 25% in 2008 to above 75% in 2023 in relation gross domestic product (GDP).
Zulu said that South Africa’s high debt-to-GDP ratio was due to several interrelated factors.
She highlighted that Eskom’s debt had risen from R107 billion in the year ended March 2010 to R493bn in the year ended March 2020, which was why the collaboration with the private sector in the form of renewable energy independent power producers (IPP) was so necessary.
In the panel discussion, Zulu lamented that it took 36 months to separate the transmission division of Eskom from the generation division as the transmission division was the “cash cow”, while the generation division incurred operational losses due to the high use of expensive diesel.
She welcomed the minimal use of diesel in the current financial year as that would reduce diesel usage by at least R12bn.
Hlengiwe Zondo-Kabini, a partner at Fasken, said the formation of the Government of National Unity was grounds for hope, as it would unlock opportunities for SOE reforms including regulator and operator relations by providing policy certainty and ensuring competent leadership without the frequent changes of leadership that some SOEs had to endure.
Zondo-Kabini said improved leadership could then result in financial stability as SOEs had drained more than R456bn over the past nine financial years.
She warned, however, that time was not on the side of reforms as politicians had a 60-month life span, while just to get permitting done could take at least 24 months before a project could get started.
Other panellists cautioned that provincial SOEs were operating below the radar of public scrutiny, while improving SOEs would be a boon not only for South Africa, but for the larger region as reflected in Eskom growing its power exports by 34.3% year-on-year in September.
BUSINESS REPORT