The Nuclear Energy Corporation of SA (Necsa) is once again scrambling to pay salaries, this time by soliciting a loan from its only profitable subsidiary.
Necsa is the custodian of the country’s nuclear programmes, which include a medical radioisotopes business that manufactures nuclear medicine for cancer treatment and a fluoro chemical manufacturer.
It is one of several state-owned companies that became dysfunctional during the Jacob Zuma administration and has made a loss every year since 2014, with the exception of
2019, during which an adjustment of assets was made to the balance sheet.
Its next tranche of funding from the Treasury of R500m will only become available on April 1. Salaries for the past three months were paid from ring-fenced funds for particular projects.
In reply to questions, Necsa said "it is considering all options available in relation to meeting its short-term financial obligations, key amongst those being payment of salaries and benefits due end of March 2020".
"This includes requesting a loan from NTP Radioisotopes,
its 100% own subsidiary, with clearly stipulated repayment conditions by the first week of April," it said.
"This is done within the governance prescripts and inter-company financial exchanges are a common feature within the Necsa group.’’
However, the Companies Act restricts loans between inter-related companies and requires that the directors of the com-
pany making the loan satisfy themselves that the company will pass a solvency and liquidity test.
NTP Radioisotopes was shut down for 12 months in November 2017 by the national nuclear regulator, causing a R1bn loss
in revenue.
It has since resumed full production but lost market share during the shutdown, making its revenue projections less certain.
NTP did not answer questions from Business Day on whether the directors had approved the loan and what steps had been followed.
Necsa has a new board chaired by Dave Nicholls, former head of nuclear energy for Eskom, which was appointed by mineral resources & energy minister Gwede Mantashe in January.
Attempts by the previous board put in place by Mantashe’s predecessor Jeff Radebe to turn the company around were not supported by the government, leading ultimately to their resignation.
Several board members, including chair Rob Adam, a towering figure in the nuclear industry, resigned in July 2019 after only seven months.
The remaining four directors resigned in January citing a dysfunctional relationship with Mantashe, who they said had refused to engage with their turnaround plan or reply to their correspondence.
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