New changes to restore investor confidence
January 30, 2018
Pretoria, South Africa: Eskom’s dark days are numbered as the government says it is committed to overseeing the turnaround of Eskom in order to improve its liquidity position and restore investor confidence.
Public Enterprises Minister, Lynne Brown, also announced that despite the appointment of a new board at Eskom, Moody’s recently downgraded the utility, citing its deteriorating liquidity position and the ability of government to provide direct equity support.
Brown said this when she briefed the Portfolio Committee on Public Enterprises during the meeting of the leadership of State-owned companies (SOC's) at the Old Assembly on Tuesday (January 30, 2018).
Her remarks come as government continues to pull all stops to ensure there is improved governance at SOC's.
“We remain resolute in our endeavours to turn the company around and Eskom is already seeing investors and lenders reviving their engagements and commitments to the company,” said Brown.
As the Minister made her remarks at the meeting, Eskom was scheduled to table its 2017/ 18 mid-term results at Megawatt Park in Sunninghill today.
“Allow me to also add that the new Eskom board was legally constituted in terms of the company’s Memorandum of Incorporation (MOI), and charged with systematically addressing the governance, leadership, operational and financial challenges it is facing,” she said.
Calls for SOC boards to shape up or ship out
Brown further stated that non-performing boards at SOCs will be rotated if they fail to improve governance.
While the mandate of SOCs is to drive industrialisation and economic growth to help address high levels of inequality in society, government is continuing the programme of fiscal prudence and consolidation.
“The expectation is that all financial instruments, including government guarantees with loan conditions, will be managed in such a manner that no debt defaults will occur.
“The boards at all of our SOCs are on high alert to mitigate negative impacts on their entities ratings and consequently, the sovereign rating.
“The message to the boards of all state-owned companies is that they must shape up or ship out. If they are unable to instil confidence in their management and oversight responsibilities, they will be rotated,” she asserted.
The Department of Public Enterprises is presently vetting applicants and nominees for the new Denel board.
Denel is the largest manufacturer of defence equipment in South Africa and operates in the military aerospace and landward defence environment.
Brown said the process of rotating board members at other SOC’s is also underway.
“With regard to the contestation around the audit opinion of Denel’s 2017 Integrated report, the company, department and Auditor General, are working together to reach resolution,” she said.
She said she was relieved to see that the judicial commission into alleged impropriety at State-owned companies is coming to fruition, while law enforcement agencies appear to be making progress with their investigations.
“As I said many times last year, the only way to get to the bottom of the swirl of allegations of malfeasance and to restore public and investor confidence in our SOCs is to diligently investigate them.
“In addition, I have asked President Zuma to fast-track the proclamation of the SIU investigation I requested into contract management and procurement at Eskom and Transnet.
“This investigation will tie up loose ends left behind by a series of investigations commissioned by Eskom boards, provide the present administration with critical knowledge to empower procurement reform, and further propel confidence in the company,” said Brown.
The minister added, meanwhile, to strengthen SA Express in the short-term, the department and the airline have agreed to second the department’s Deputy Director-General: Legal and Governance, Ms Matsietsi Mokholo, to act as CEO of SA Express.