Gordhan: SOEs cannot do what they like and expect state support

State-owned enterprises are part of a capable, ethical and developmental state and must play a key role in generating inclusive growth for SA, Minister of Public Enterprises Pravin Gordhan said on Tuesday.

Over the past 16 months, his department has made substantial progress in cleaning up embattled SOEs, he added.

‘Moral hazard’

“SOEs must provide efficient and cost-effective network services and deliver public services to both those who can afford to pay and those that can’t,” he said during the Parliamentary debates on the recent State of the Nation Address.

“The moral hazard at SOEs must be addressed. It is very important that SOEs cannot do just what they like, and the state will support them. We must implement our plans with urgency.”

Gordhan quoted from the ANC’s Strategy and Tactics document, which states that, if SOEs are managed in an equitable and cost-effective way, they “can contribute to both deliver a quality and reliable service at a cost that enables South Africa to be globally competitive”.

It adds: “SOE’s will require a clear public-interest mandate, which [is] consistently enforced.”

Gordhan emphasised that good governance is critical to ensure a positive contribution from SOEs.

“We will do our oversight role of SOEs with increased vigour and SOE boards will have to do the same. We will more closely monitor SOEs,” said Gordhan.

“Major SOEs were decimated and find themselves in all sorts of difficulties because of malfeasance that enabled state capture, and rampant corruption.”

Clean-up

Gordhan said over the past sixteen months, his department’s work on restoring good governance, stabilising operations, appointing new boards and directly confronting corruption, “proceeded with efficiency, speed and purpose”.

This includes the appointment of new boards at SOEs like Denel, Eskom, Transnet and SA Express.

In his view, although operations at SOEs have improved, it is still not optimal. Furthermore, the financial position of SOEs are still only partly resolved and the fiscal burden they cause are not solved as many are “still too dependent on the fiscus or borrowing”.

“There is much more to do. We must now continue to reposition and revitalise our SOEs.”