Public Enterprises Minister Malusi Gigaba has hinted to far greater collaboration between State-owned enterprises (SoEs) and the private sector in delivering much-needed economic infrastructure to support economic growth and job creation, as well as to tap into the current commodity upcycle.

Speaking to members of the Portfolio Committee on Public Enterprises at the weekend, Gigaba argued that corporate plans could not be “restricted by the funding capacity of the SoEs balance sheets”.

“We need to view funding of infrastructure as a national task and therefore need to look at new sources of funding,” he said.

The “planning paradigm” should also not be restricted to “narrow balance sheets”, but be based on optimising the overall impact of the SoEs on the economy and society.

Envisaged was an “innovate and pragmatic” approach to funding infrastructure assets, without “compromising government’s strategic control”.

Backlogs in power and transport infrastructure have been highlighted by the mining industry, in particular, as placing limitations on South Africa’s ability to fully participate in the current commodity upswing.

The new funding model would, thus, necessarily involve customers and other stakeholders, Gigaba added.

Such a vision would be closely aligned with sentiments expressed by a number of mining companies, which have argued that an enabling environment should be created to allow the private sector to support the development of infrastructure that could facilitate an upscaling of mineral production and exports.

Freight logistics group Transnet has also acknowledged it balance-sheet limitations in delivering the logistical systems needed to fully tap the resources boom and has proposed a private sector participation model, which awaits Cabinet approval.

“We are already exploring how we can design special financial instruments to add to Eskom’s capital base, whilst maintaining government ownership of the company,” Gigaba revealed.

He also pointed to a range of international experiences, where private capital has been galvanised in support of specific SoE programmes.

In France, Gigaba noted, Électricité de France’s top 30 customers purchased electricity upfront 25 years ago to secure their supply at a predictable price. But this also gave the utility the capital it required to embark on an ambitious nuclear programme.

“In Australia, Anglo American invested over R20-billion in port infrastructure to support its mining activities without having operational control of the assets,” Gigaba added.

Government, he said, recognised the “intrinsic link between the investment of SoEs and the growth of the SoE customers and suppliers,” Gigaba said.

“A large-scale export orientated iron-ore mining organisation, located in the hinterland, cannot exist, let alone compete in a global context, without an efficient logistics link with a port. A foundry, or smelter, cannot be established without guarantee of supply and competitively priced electricity. And, a locomotive manufacturer on the southern tip of Africa cannot survive if the national rail company is not consistently buying and maintaining locomotives,” he said.