The new administration has started revising a draft law that will guide the future management of state-owned companies.
Attempts to enact a law creating a central company failed in the last administration that withered just before the May 29 elections. The shareholder management bill died a quiet death when the five-year term expired before it could be passed.
This week, Maropene Ramokgopa, minister in the presidency responsible for planning, monitoring & evaluation, briefed the public enterprises portfolio committee on the new administration’s plans to bring the draft legislation back into the lawmaking sausage factory that is parliament.
The lapsed bill is meant to create a central holding company under which most national SOEs will fall, similar to Singapore’s Temasek. Ramokgopa is the minister responsible for, among other things, the department of public enterprises (DPE), which was previously under Pravin Gordhan. It was Gordhan who introduced the lapsed bill and the idea of a central holding company to parliament, but his plans fell on the deaf ears of MPs, maybe as a way to frustrate him; hence the bill eventually dying last term.
The new term is full of grey areas and political lacunas stemming from President Cyril Ramaphosa’s announcement that the public enterprises department would cease to exist. It could take two years to wind down the department, which is the shareholder representative for six SOEs, including Transnet, Eskom and SAA. Ramaphosa’s announcement in July that SOEs would report to their policy ministries is what creates a new grey area. It implies that the ministry of transport would be responsible for outright supervision of Transnet, with Eskom falling under the energy and electricity ministry.
Barely two months into the new term, ANC cabinet members of cabinet have made enough statements to show they are not singing from the same hymn sheet
However, there are administrative loops to effect this change, as the power of the ministries is dispensed through the existing shareholder model that places the outgoing DPE at the helm. Therefore, Ramokgopa would be justified in asserting her control. At the same time, the ministries of transport and energy would also salivate at the thought of controlling Transnet and Eskom, therefore creating the perfect environment for a turf war.
The government has created another committee, and yet another acronym, the National Macro-Organisation of Government (NMOG), chaired by director-general in the presidency Phindile Baleni. Merging departments is fraught with difficulties such as labour law considerations, budgets and dealing with projects under way.
The NMOG has five work streams to consider the process of shutting down public enterprises and the creation of new departments such as energy and the separation of agriculture from land affairs.
Barely two months into the new term, ANC cabinet members have made enough statements to show they are not singing from the same hymn sheet.
Deputy president Paul Mashatile told the Sunday Times two weeks ago that SAA should be sold as the state “is not in the business of owning airlines”. Last month, Ramokgopa said she disagreed with private sector ownership of parts of state companies, which Ramaphosa and his previous cabinet had pushed.
She has bluntly opposed the sale of equity stakes in these entities — including SAA — to private players. In an interview with Business Times, Ramokgopa also dismissed suggestions that SOEs would fall under their line departments after the scrapping of the DPE with the formation of the government of national unity.
This position appears to contradict resolutions and various events, including the statements made when Ramaphosa announced his cabinet, and resolutions of ANC conferences in 2017 and 2022 which stated that all SOEs must be transferred to their policy departments.
Ramokgopa told Business Times the government should hire private operators to help manage SOEs while they remain 100% state-owned.
Meanwhile, government sources believe Transnet and Eskom now fall under the transport and energy ministries.
The changes in SOE reporting lines, and lately the lack of clarity, happen as Transnet is undergoing a financial review and implementing a turnaround plan. The rail and ports company will need a solid relationship with the government, its sole shareholder, as it looks to “optimise” its balance sheet.
Renegotiating debt with creditors or any new efforts to raise capital will need shareholder support. Navigating the finance minefield will not be easy for Transnet if there is no clarity on who the shareholder representative is or what the policy positions are.
The policy stance on strategic equity partners must be clarified.
This lack of policy clarity is not surprising considering recent political changes such as Gordhan’s departure from the cabinet. He worked hard to sell the idea of strategic equity partners in cabinet and ANC circles and eventually got express support.
To troubleshoot, Ramaphosa will have to issue a written delegation of authorities to affected ministers and clarify what roles fall on whom. New thinking may also be required because the idea of a central holding company is not without pitfalls. The company would centralise a lot of governance risk, and where there were failures, a larger asset would be affected by one bad move, bringing material systemic risk to the economy.
• Mkokeli is the lead partner at public affairs consultancy Mkokeli Advisory
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