Monday, 28 June 2021

Pretoria: President Cyril Ramaphosa says state-owned enterprises (SOEs) should be at the forefront of economic and social transformation.

“They are responsible for providing the infrastructure and the services on which the economy depends, whether it be in the generation of electricity, commuter transport, water provision, freight logistics or telecommunications,” President Ramaphosa said.

In his weekly newsletter, President Ramaphosa said it is important to remember that the state does not own these companies simply for the sake of it, or because this is what the democratic government inherited from the apartheid state.

“Rather, our approach to state ownership is informed by the need for the effective functioning of key network industries, such as energy and ports, and by the need to ensure that the basic needs of all South Africans, particularly the poor, can be met,” President Ramaphosa said on Monday.

He said successive democratic administrations have supported the idea of a mixed economy, comprising public, private and forms of collective ownership.

“The balance between these different forms of ownership should be determined by the developmental needs of the country.

“We firmly believe that public ownership is necessary in critical sectors of the economy and that the country needs robust SOEs that are able to drive economic growth and transformation.

“This is particularly the case in the delivery of public goods such as electricity and water, where SOEs are able to pursue a developmental mandate in the public interest as opposed to a purely commercial one,” the President said.

President Ramaphosa said government has made it a priority to turn the SOEs around to root out corruption, to improve their governance and to enable them to play the role they should in driving economic growth and employment creation.

“To this end, we have embarked upon a number of reforms to strengthen these SOEs so that they can produce the results that the country needs and expects.

“These reforms are not intended to weaken the public sector or to reduce its role, but to make it a more dynamic and effective part of our economy,” the President said.

President Ramaphosa said given the number of SOEs and the differences between them, government is not applying a blanket policy to these reforms.

President Ramaphosa said an intervention that works for one SOE may not be appropriate for another, requiring a case-by-case approach.

Restructuring Eskom

“One of the most important reforms is in the energy sector. We have begun the process of restructuring Eskom into three different state-owned entities, responsible for generation, transmission and distribution respectively.

“This is because the previous structure of Eskom was ill-suited for a changing energy landscape. It had become inefficient and costly and was not sufficiently transparent,” the President said.

The establishment of a transmission entity in particular will mean that Eskom will be able to purchase power from a broader range of providers, both private and public.

President Ramaphosa said the reforms will give Eskom the space to address its financial and operational challenges.

National Ports Authority

With regard to ports, President Ramaphosa said establishing the National Ports Authority as a Transnet subsidiary with its own board will, among other things, mean that revenues generated by the ports can be used to replace old equipment and upgrade and expand ports, work which has been delayed for more than a decade.

“It will also encourage the ports authority to treat all terminal operators fairly and equally in the interests of port users.”