A radical new model for South Africa’s troubled State-owned enterprises (SOEs) could be on the cards, with the approval this week of the draft National State Enterprises Bill, which would lay the basis for private equity investment in state companies and listings on the stock exchange.
This will include the biggest "commercial" State enterprises, such as Eskom and Transnet, which will be moved into a newly created State Asset Management Company. It is the culmination of five years of work by Public Enterprises Minister Pravin Gordhan, advised by some of the members of the Presidential State-Owned Enterprises Council. The council itself has not produced a policy document.
The bill is expected to be published for public comment in the Government Gazette on Friday.
The new shareholder model is based on similar reforms in Malaysia and implies greater private participation in the network industries. Eskom and Transnet urgently need more capital, but are constrained from borrowing as they need more revenue to service existing debt.
Gordhan has previously said that the model would have the advantage of separating the state's ownership functions from its policy and regulatory functions, minimising the scope for political interference, and introducing greater professionalism into the entities.
He has also previously said that the new model would replace the Department of Public Enterprises, which would cease to exist.
It is unclear, though, how the model proposed by Gordhan will be received by the African National Congress (ANC), which in December last year passed a resolution that all State-owned companies should return to their line departments. In particular, the ANC wanted to see Eskom housed in the Department of Energy.
However, the prospects are slim that the bill will be processed by both Nedlac and Parliament before the legislature is dissolved, ahead of the next election. Parliament has a packed programme as Cabinet ministers rush to finalise their programmes. Legislation not completed when Parliament rises – probably in March – will have to be started again from scratch by the new administration.