NEWS
25/06/2018 07:15 SAST | Updated 25/06/2018 07:15 SAST

Gordhan Reaches Out To Banks: 'Help Us Fix SOEs'

A delegation from Treasury and Public Enterprises met with banks to ask for their help in fixing embattled SOEs.

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Pravin Gordhan, minister of public enterprises.

Public Enterprises Minister Pravin Gordhan and Treasury have appealed to the heads of banks to come to the aid of troubled state-owned enterprises (SOEs), Business Day reported. A delegation including Gordhan and former deputy finance minister Mcebisi Jonas reportedly met with the CEOs of financial institutions last week, appealing for funding and solutions on how to restructure SOEs.

The Banking Association SA, the Association for Savings and Investment SA, Treasury and the Department of Public Enterprises will reportedly issue a statement on the meetings on Monday.

According to Business Day's sources, it was agreed that a small team from the private sector would help government to tackle the liquidity problems facing Denel, SAA and SA Express. They would also assist in exploring solvency questions at Eskom and SAA.

CEOs reportedly felt that the solution was no longer to lend money to SOEs, but to "fix them". There was also a sense that SOEs needed to be "dramatically downsized", according to sources.

In spite of major interventions by Gordhan like the replacement of boards, SOEs are still reportedly in crisis.

Business Day reported last week that according to the Black Business Council (BBC), Gordhan believes the SOEs' biggest issue is liquidity. The Council reportedly met Gordhan to discuss SOEs.

BBC secretary-general George Sebulele reportedly said Gordhan gave a breakdown of the problems facing SOEs. The problems were liquidity and a lack of capital to fund projects.

President Cyril Ramaphosa recently announced the establishment of a presidential council which SOEs will have to report to on their financial problems, calling the SOEs "sewers of corruption and filth", according to TimesLive.

"We are going to look at the balance sheet of every state-owned enterprise‚ scrutinise it property and see what is happening in each one so that the balance sheet management is no longer in the dark corner of some funny office somewhere away from that SOE," he reportedly said.

CEO Vuyani Jarana reportedly said the SAA needs R21.7-billion over three years in order to become profitable again.

Two weeks ago, Eskom faced protests and the threat of strikes by its workers after offering no wage increases because of its financial problems.