Minister of Public Enterprises Pravin Gordhan has tabled a bill that will establish a holding company to house strategic State-Owned Entities. File Picture: Theo Jeptha / Independent Newspapers
Minister of Public Enterprises Pravin Gordhan has tabled a Bill that will create a holding company to house state-owned companies.
The National State Enterprises Bill is expected to be tabled before the National Assembly’s portfolio committee on public enterprises, where it will be processed.
When the bill was mooted, the government said the holding company for SOEs would improve their operational and financial performance.
The National Treasury has poured in billions in more than a decade to bail out a number of SOEs.
However, concerns have been raised about the poor performance of entities, including Transnet and Eskom.
Cabinet approved the National State Enterprises Bill last December. Gordhan tabled it in Parliament on Thursday.
The bill acknowledges that SOEs have been a drain on the fiscus.
“It is accepted that during the past decade, the performance of South African commercial State-Owned Companies (SOCs) has for the most part been suboptimal. Key weaknesses of the system have been noted as being an excessive politicisation of board and senior management appointments in SOCs, weak coordination of both national objectives and sectoral approaches, and a deficit of the required professional skills and sound corporate governance approaches. The consequences of these weaknesses are that not only have commercial SOCs not contributed to the aims of a developmental state, but they have also generally proved to be a massive drain on the fiscus,” states the bill.
It further states that there has been agreement that the state must formalise its role as a shareholder in these entities.
The bill said, however, that there must be limits to the interference by politicians in the SOEs.
“The bill provides for the establishment of a State-owned holding company, SAMSOC, to advance the socio-economic objectives of the country to preserve and grow the long-term value of national assets for the benefit of all citizens and future generations and thereby increase the value of investments in selected state-owned companies,” said the bill.
The holding will ensure that subsidiary companies of SOEs are insulated from political interference.
The poor performance of key SOEs, including Eskom and Transnet, has been said to be the reason for weak economic growth.
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Politics