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Thread: Parastatals five year performance

  1. #1
    Site Caretaker Dave A's Avatar
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    Parastatals five year performance

    An interesting article here by Wiseman Khuzwayo on parastatals.
    The department of public enterprises released an analysis of the performance of state-owned enterprises (SOEs) under its control for the past five years.


    Eskom plans to spend R343 billion over the next five years to increase supply of electricity in order to support South Africa's continued economic growth. Sustained growth in demand for electricity and the late start to a substantial build programme placed undue strain on Eskom's power generation capacity.

    The review says: "This has occurred in the context of a global scramble for energy resources and skills, and a long-predicted decrease in Eskom's reserve margin. The Eskom build programme has received a commitment of support of R60 billion from government, and in addition to this the company will have to raise additional capital on local and international markets to fund its expansion programme."


    The period under review has seen the financial stabilisation and the reorientation of the transport and logistics parastatal around its core functions of rail, harbours and pipelines in the recent past.

    The review says: "Transnet plans that continued re-engineering, together with a capital investment programme of R84 billion, will enable Transnet to offer sufficient capacity to its customers. Transnet has shown a distinct improvement in its overall financial performance in the past three years and this coincided with the implementation of the four-point turnaround strategy to build Transnet's core business units into efficient, profitable and customer orientated entities."


    The period leading up to the national airline becoming a standalone parastatal from Transnet in 2006 was characterised by a number of challenges, from currency adjustments and common issues affecting the global aviation industry, resulting in significant losses, the review says.

    "To address these challenges, and the inefficiencies of the past, SAA is currently undergoing a restructuring, aimed at targeting improved efficiency and effectiveness."


    The arms and original equipment manufacturer suffered from poor performance due to a cut in local defence spending.

    It says a turnaround progressed significantly and losses fell in the past five years, with this trend expected to continue.

    "The balance sheet does not currently support additional financing required... Further end-state restructuring of Denel is under way to ensure the consolidation and long-term viability of the SOE."


    The review says the diamond mining company suffered from declining revenues and static costs, and that it has been thinly capitalised since inception.

    A community claim to land was recently resolved, paving the way for restructuring.

    The company has operated at a loss for the past three years.


    The state-owned forestry company was restructured to achieve privatisation objectives.

    The review says: "Financial performance of Safcol has been driven primarily by strong demand and an increased selling price for timber products."


    Pebble Bed Modular Reactor (PBMR) is a joint venture between the South African government, Eskom, the Industrial Development Corporation and global company Westinghouse. It was established to pioneer small, standardised, inherently safe, modular reactors.

    The review says: "This SOE is still in project delivery stage and as such requires net investment and support from the joint venture participants."
    from Business Report here
    Most of those reports are not that impressive and seem riddled with excuses. But I seem to think there are more than a few missing. Telkom, Portnet off the top of my head.

    Probably the common thread I'm seeing is "past inefficiencies" and a seeming lack of expansive development.

    What do you think of the performance of parastatals?

  2. #2
    Diamond Member wynn's Avatar
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    Portnet and Transnet are going to become more important as flight costs sky rocket (excuse the pun) due to the fuel price escalation.
    Unavoidably more people will holiday by sea and people and goods will travel by train.

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