SAA, which is being sold to Takatso Consortium as a strategic equity partner, is still reeling from the effects of its two-year business rescue process and some suppliers are reluctant to trade with it, says public enterprises minister Pravin Gordhan.
To ensure goods and services are delivered and the national carrier is able to continue operations, SAA has to prepay suppliers, Gordhan said in a parliamentary response to the EFF.
“The concluding of the procurement process for goods and services takes some time due to the intensity of the process, the steps that need to be followed and other nuances like a need to approve deviations from normal procurement processes by the National Treasury in cases of limited or confined bidding or to extend a contract beyond 15% or R15m (whichever is the lesser),” Gordhan said.
This issue has, however, been addressed by the Treasury’s instruction to state-owned entities and government departments in May allowing the accounting authority or board to approve the deviation or extension and report only to the National Treasury thereafter.
“This, together with other steps taken by the entity, will no doubt contribute to an efficient procurement process,” he said.
But it is unclear how the procurement challenges at SAA have so far affected its balance sheet.
SAA, a serial underperforming state-owned enterprise, last recorded a profit a decade ago and relies on government bailouts to remain afloat. Over the past three years, SAA has received R16.4bn, beginning in 2020. This includes R10.5bn to fund its business rescue plan.
The airline resumed operations in September last year after two years of being grounded due to business rescue. The Takatso Consortium, comprising Global Aviation and Harith General Partners, is due to inject R3bn in working capital over the next two years.
The funding from Takatso is, however, expected to be disbursed to the airline only once the transaction — which is yet to be approved by regulatory bodies and competition authorities — between the government and the equity partner is concluded.
Once it is concluded, Takatso will own 51% of the airline and is expected to be involved in its operations.
• Takatso comprises Global Aviation, owner of the new low-cost carrier Lift, and pan-African infrastructure investor Harith General Partners. Takatso chair Tshepo Mahloele is also chair of Arena Holdings, which publishes Business Day and other titles.
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