South Africa P.I.G.

R200bn spent to save state entities

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgL_nj83rHBCxFmGVB3Z1b33i8tyRhp5pjREXRYlgUTZ6ixlW4pw301LuGccsTNYtnNNYK2wRpDLMrve2GQ9x4PSf4NWMith4tQmItHqs3xzym1B6CVEZqS6-pG884vh8VYovVP4mhZbRo/s1600-h/bailouts-taxpayer-lose.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5394068378972274978" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgL_nj83rHBCxFmGVB3Z1b33i8tyRhp5pjREXRYlgUTZ6ixlW4pw301LuGccsTNYtnNNYK2wRpDLMrve2GQ9x4PSf4NWMith4tQmItHqs3xzym1B6CVEZqS6-pG884vh8VYovVP4mhZbRo/s400/bailouts-taxpayer-lose.jpg" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 350px; CURSOR: hand; HEIGHT: 350px" /></a> Almost R200bn was provided in financial assistance in 2008 and 2009 to state-owned entities. The figure comes from a response by the Treasury to parliamentary questions posed by the DA. The Treasury provided the DA with a list of guarantees, loans and transfers, which were supplied by the state-owned entities over a four-year financial period. DA member of parliament Dion George said: “Considering that the budget deficit is expected to range up to R100bn (8,5% of GDP) in a worst-case scenario, it is clear that halving the financial assistance to state-owned entities would save enough money to avert any budget deficit. "Financial support to state-owned entities has jumped by more than 1 000% from R16,6bn in 2007-2008 to an enormous R199bn in the following year.” “The financial burdens created by most of the state-owned entities are due to their poor management and corruption due to the ANC policy of cadre deployment and there is no reason why taxpayers should be bailing them out year after year,” the DA MP said. <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnLqK98iwGfQ-rO-Xhqy3XpGS2sAwAS_6HR2Zjkgn12FMGdttMDYCP6SoMjEX_3dEI0ZIjXMVaZcDh-GY_Sh99iyfLIY1Te052U8PbLE8CafY2LKIspKX2-w4eKqonfOIPEzdVMXIwVuI/s1600-h/bailouts-taxpayer-lose.jpg"></a> State-owned enterprises lining up for bail-outs These days there are many more people with their hands out. Except you won’t find them at traffic lights -- they represent state-owned enterprises and they’re lining up before government for bail-outs. With Finance Minister Pravin Gordhan projecting a tax revenue shortfall of between R50-billion and R60-billion that will lead to an increased budget deficit, it is still unclear whether and how government will finance its underperforming parastatals. As it stands, arms company Denel is seeking nearly R1.7-billion, the SABC R2-billion, Sentech R1.16-billion and South African Airways (SAA) up to R4-billion. Eskom reported a loss of R9.7-billion this week, but it appears it will not be asking for a bail-out from government. The Pebble Bed Modular Reactor (PBMR) project also requires R31-billion for the development of its demonstration and pilot fuel plants, and the Airports Company South Africa (Acsa) is buckling under the debt it has incurred for its airports upgrade programme and may also look for government assistance if it doesn’t get the increased tariffs it has asked the regulator for. The South African National Roads Agency, which has huge cash-flow issues, was recently given a R35-billion capital injection by government. Eskom Following the electricity crisis of 2008, Eskom secured a loan from government of R60-billion, with R177-billion in government guarantees, to fund its capital expenditure plans and bring additional electricity capacity on stream. It is still facing a large funding gap on a plan that will cost a total of R385-billion. But, critically, the utility has reported a loss of R9.7-billion for the financial year, raising the question of how it will sustain these losses, given the already substantial help it is receiving for its building programme. Denel Denel announced a R544-million loss. It is seeking close to R1.7-billion to replace R1.1-billion in government guarantees. The company is expected to be profitable only in 2011-12 and has failed to post a profit for almost a decade. Acsa Last week the Airports Company South Africa reported a 44% drop in earnings, a combination of the large debt it has incurred to fund its airport upgrades programme and the recession’s effect on airline traffic. Acsa has shelved the plan for a midfield terminal at OR Tambo International, cutting its planned capex expenditure for the next five years from R22-billion to R17-billion. Last year Acsa spent R5.2-billion upgrading OR Tambo and Cape Town Internat ional airports ahead of the 2010 World Cup and has begun work on a new R6.8-billion airport at La Mercy, outside Durban. Acsa has asked the regulator for a tariff increase, which it hopes will allow it to service its debt. SAA South African Airways is expected to report an operational profit of R1.2-billion before interest and tax. But the airline is facing a R1-billion fuel-hedging loss, a R727-million provision for 15 Airbus A320 aircraft that are on order and R1-billion Voyager liability that will result in a massive net loss. The end result will be a request for a government bail-out of anywhere between R1-billion and R4-billion. SABC The SABC’s financial woes have been well documented and it appears it owes money all over town. When the interim board decided to settle with former chief executive Dali Mpofu, the department of communications had to fork out R4.4-million because the broadcaster didn’t have any money. It has been reported that the SABC is looking for a R2-billion bail-out from government. Sentech With the digital migration process under way -- which will see South Africa’s television signal switched from analogue to digital -- Sentech is demanding more funding. Government has committed just short of R1.18-billion to Sentech but will probably need to provide a further R1.16-billion. Government also faces a major shortfall for its set-top box subsidy programme. A reported R400-million is on the table, but an estimated R2.45-billion is required. In addition, only R20-million was allocated for the vast educational campaign that will be needed to inform consumers about the digital migration process. Communications Minister Siphiwe Nyanda has admitted that he will have to lobby treasury for further funds. PBMR The PBMR’s demonstration and pilot fuel plants have had their costs almost doubled to R31-billion. Public Enterprises Minister Barbara Hogan said recently that government remains committed to the PBMR project and that its funding was being assessed. So far the PBMR project has received R9-billion, of which it has spent R8-billion. PBMR has about 920 staff and annual running costs of R1-billion. Transnet Transnet, one of the country’s best-performing parastatals, reported a profit of R5-billion in June, down 23% from last year. Acting chief executive Chris Wells said that next year Transnet would launch its international bonds, as it was determined to raise almost half of the R80-billion in capital it needs for its multibillion-rand projects.

R200bn spent to save state entities

Almost R200bn was provided in financial assistance in 2008 and 2009 to state-owned entities. The figure comes from a response by the Treasur...

1:53 PM

Arms deal scandal part II : Here we go again

<div align="center">Another arms deal scandal which could cost South Africans R47 billion.</div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEieNZKwMF7pNpNW5OBcGPCZx6bmaUe5J5eRFJkfxb-mv3UWR-ac2tnV7QH-Q8GILOlm_1ezSGpgtAQ9M1K_w98um6Pxg1GtEpBQCUVfQ8tcbktVZIVizEOWaXU52_2VeehvZFsnmltRu84/s1600-h/airbus+A400M.jpg"></a><img alt="" border="0" id="BLOGGER_PHOTO_ID_5394035490258383874" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKPAFS6Ut7sTr1sqdXWWa8fLSTTmnX5jgjoFEx7OIV6lvI9HF5bjFCxrBb_vYnDLQZ28YNtuMjYW71wR16APz4xsjTXwKzfQNYrx4yjAV31NtEozWadPERY0mWb8phmF0FNhOiLXJzFm4/s400/airbus+A400M.jpg" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 191px; TEXT-ALIGN: center" />A serving cabinet minister and a retired South African National Defence Force (SANDF) major-general stand to make millions from a deal with Airbus that can bankrupt the SANDF. At R47 billion the Airbus jets will consume the entire SAAF budget for at least three years. Yesterday The Citizen established that among those set to make a killing from the deal are a serving cabinet minister and a retired SANDF general and the widow of controversial Defence Minister Joe Modise. On April 28, 2005 South Africa signed a deal with Airbus for the delivery of eight jets capable of ferrying heavy equipment such as armoured vehicles and large helicopters as well as combat troops thousands of kilometres. The deal was inexplicable as the SAAF already owned a fleet of 12 C130 transport aircraft that had been extensively modernised and upgraded by Marshall Aviation in Britain and Thales in France. Only months after the deal was signed, Major-General Jackie Sedibe was made a director of Aerosud, a South African company which is the local business partner of Airbus. Aerosud stand to make millions from the deal. At the time Sedibe joined the board she was still a serving SANDF officer. Department of defence spokesman Ndivhuwo Mabaya told The Citizen that officers of Sedibe’s rank were allowed to hold business interests, providing they had the permission of the Minister of Defence. It is not clear if Sedibe had this permission at the time she joined Aerosud, which holds a number of contracts with the SANDF and department of defence. Another director of Aerosud is Deputy Minister of Correctional Services Hlengiwe Mkhize. Mkhize became a director of Aerosud in 2000. Sisulu 'knew about arms deal for months' The Democratic Alliance on Friday called on Defence and Military Veterans Minister Lindiwe Sisulu to reveal the Airbus A400M military transport aircraft acquisition details. Information about the dodgy Airbus A400M arms deal should be made public and investigated by a special multiparty ad hoc committee of Parliament, DA spokesman David Maynier said. On Thursday, Sisulu stated information about the deal should not have been made public because it was embarrassing and compromised diplomatic relations. "But it now emerges that the minister was briefed and informed about the Airbus A400M deal. "The fact is that the minister was informed and has known about the risk posed by the Airbus A400M arms deal for months. "The minister appears to be reverting to her default position which is to cover up rather than to open up," Maynier said. The key question was why, if the minister knew about the massive risk posed by the deal, was the parliamentary portfolio committee on defence and military veterans not informed, he said. The latest revelations about the deal raised even more questions including whose interests were really served with revelations that Deputy Correctional Services Minister Hlengiwe Mkhize and former Major-General Jackie Sedibe were directors of Aerosud, a local company with an interest in the Airbus A400M arms deal. <ul><li>What was the real cost of the eight transport aircraft, given the Airbus claim that the R47 billion price tag was exaggerated? </li><li>Why was there a failure to provide for maintenance costs of the transport aircraft,</li><li>why in the first place was there no tender process for the acquisition of the aircraft, </li></ul>"The public has a right to know not only how we got into the Airbus A400M mess, but also how we are going to dig ourselves out of the Airbus A400M mess.

Arms deal scandal part II : Here we go again

Another arms deal scandal which could cost South Africans R47 billion. A serving cabinet minister and a retired South African National Defen...

12:48 PM

Cities face ruin, warns hard-hitting government report

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9vNbuRXk4sPwO1FbiaPQ2fn9K2aW8JzegG62XKMkT3ni_bJzq1z7KPBVMnASN4tTfoKzo0Sci-PlVyXvAQk1ztOXeOLmWzyixonzhQs1_Vi3-Sv4M5jijXHXSwQXSpzMKPTPCirYECK0/s1600-h/ANC-Govern.bmp"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5393942915911416226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9vNbuRXk4sPwO1FbiaPQ2fn9K2aW8JzegG62XKMkT3ni_bJzq1z7KPBVMnASN4tTfoKzo0Sci-PlVyXvAQk1ztOXeOLmWzyixonzhQs1_Vi3-Sv4M5jijXHXSwQXSpzMKPTPCirYECK0/s400/ANC-Govern.bmp" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 272px; CURSOR: hand; HEIGHT: 400px" /></a>South Africans are losing faith in local government, says a hard-hitting government report that describes how political meddling and infighting have brought many municipalities to the brink of collapse, unable to render services and squandering funds while backlogs continue to mount. The report also highlights "a major gap" between policy and reality - municipalities are at the coalface of delivery but many are unable to meet the demands on them, resulting in paralysis. Compiled from assessments carried out in all nine provinces between April and August at the behest of Co-operative Governance and Traditional Affairs Minister Sicelo Shiceka, the report recommends a range of interventions to halt the rot. It proposes stripping regional and provincial ANC structures of their powers to put people in top municipal jobs, political intervention to deal with tensions and mistrust between officials and councillors, pursuing fraud and corruption allegations and jacking up feedback to communities. Laying bare the fault lines bedevilling service delivery, the report reveals the deep chasm that has opened in the past decade between local government and the people it's there to serve - fuelling the flames of community protests. It describes health-risk time bombs in parts of the country, such as the Eastern Cape, where severe drought means that sewerage systems aren't working and water and sanitation services can't be extended. The Sunday Independent is in possession of a 60-page executive summary of the report, which underpins urgent moves by the government to halt the downward spiral of decay and mismanagement and quell rising popular anger. The report lays the basis for a turnaround strategy for local government to be submitted for government approval before the end of the year, with implementation set to begin in January. It comes as President Jacob Zuma, accompanied by a top-level delegation of cabinet ministers and directors-general, prepares to meet mayors and municipal managers from across the country this week. The summit in Khayelitsha, near Cape Town, on Tuesday will focus on the state of local government and service delivery. All nine premiers and MECs for local government, as well as SA Local Government Association officials, will attend the meeting. Zuma promised in his State of the Nation address to change the way local government performed. "The president has decided to take a more hands-on approach in dealing with this and all matters of service delivery,'' said Performance Monitoring and Evaluation Minister Collins Chabane. A "merciless growth" in backlogs, combined with the "enormous weight of expectations" and service-delivery failures have "created a degree of paralysis" in the system, the summary notes. Fighting between factions and political meddling are mentioned as the main threat to effective local government, with evidence in some areas of factionalism hitting levels where it is "akin to a battle over access to state resources, rather than ideological differences". A "culture of patronage and nepotism is now so widespread that formal systems of accountability are ineffective and inaccessible to most citizens", the summary notes. "There is now a lack of citizen confidence and trust in the system", with protests "largely a symptom of their alienation" from local government as funds are siphoned off through poor financial management and corruption, service charges go uncollected and proper planning is abandoned. Also highlighted is "a major gap" between the policy demands made of local government and the capacity of municipalities to meet them. Many local authorities are unable to perform properly - widening the gap between people's expectations, policy goals and delivery. A one-size-fits-all approach is not working, the summary says Tiny municipalities cannot cope, while bigger, more competent metros are frustrated in efforts to deliver land and houses by complex split authorities that take decision-making out of their hands. This should change, the summary says. As many as 56 local municipalities - 11 of them in the Eastern Cape - are on a National Treasury "financial distress" list, while a "very significant risk" in the future is that municipalities' spending plans outstrip the revenues they can collect through service charges and rates. Almost half of municipalities were found guilty by the auditor-general of unauthorised or fruitless and wasteful expenditure - up from 38 percent the previous year. A lack of financial skills, weak support from provinces and poor controls "leave the system open to abuse and fraudulent activity", the summary says.

Cities face ruin, warns hard-hitting government report

South Africans are losing faith in local government, says a hard-hitting government report that describes how political meddling and infight...

6:50 AM

South Africa P.I.G.

R200bn spent to save state entities

Arms deal scandal part II : Here we go again

Cities face ruin, warns hard-hitting government report

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