MIDTERM BUDGET | Treasury closes the tap on ailing SOEs

Khulekani Magubane Financial reporter
On Tuesday Eskom announced that its losses had doubled to R24bn. File photo.
On Tuesday Eskom announced that its losses had doubled to R24bn. File photo.
Image: Ziphozonke Lushaba

The National Treasury is not pulling any new rabbits out of its hat for cash-strapped state-owned entities (SOEs) for now, according to the 2023/2024 medium-term budget  policy statement (MTBPS).

Finance minister Enoch Godongwana tabled the MTBPS in parliament on Wednesday amid ongoing financial and operational challenges at SOEs such as Eskom, Transnet, Denel and the Land Bank.

Godongwana also tabled the Eskom Debt Relief Amendment Bill to enhance the enforceability of the conditions agreed under the debt relief agreement.

“It provides for the payment of interest by Eskom on amounts advanced as part of the debt relief loan; the amendment also provides for the reduction of the amount of debt relief available to Eskom, in the event the entity does not comply with the National Treasury conditions,” he said.

Godongwana said the conditions are a key part of the Treasury’s intervention in Eskom and other SOEs “to avoid a repeat of the mistakes of previous bailouts”.  

During a briefing before the speech, deputy finance minister David Masondo said supply-side constraints in electricity, logistics, water and skills undermined growth, so these state-dominated sectors needed to be liberalised.

“We seek to crowd in the private sector into those network industries dominated by the state for years. But that means as you liberalise you will also need funding to support the infrastructure,” said Masondo.

Transnet requires R50bn for freight rail infrastructure but the fiscus does not have that money. He said the Treasury was focused on stabilising public finances by narrowing the budget deficit and stabilising debt.

According to the adjusted estimates of national expenditure which accompany the MTBPS, the absence of new funds to SOEs in 2023-2024 will see the department of public enterprises’ spending fall significantly.

“Compared to the first half of 2022/2023, expenditure over the same period in 2023/2024  decreased by R5.8bn [or] 97.9%. This was mainly due to no funds being allocated to SOEs in 2023/2024,” according to the adjusted estimates of national expenditure.

The statement said repayments by SOEs in the period are expected to amount to R121bn, stemming from the maturity of bonds issued by the Industrial Development Corporation, the Development Bank of Southern Africa, Transnet, and South African National Roads Agency (Sanral).

“In the following years, capital repayments will be relatively lower as SOEs build cash flows to manage maturities. Capital repayments are expected to decline significantly after another spike in 2027/2028.” according to the MTBPS.

Guarantees to SOEs decreased from R543.6bn in 2022 to R448.1bn in 2023 due to a decline in the Reserve Bank’s loan guarantee scheme from R100bn to R20bn.

“From October 2023, cabinet members requesting fiscal commitments that affect continent liabilities will report these to parliament on a quarterly basis,” the document said.


Treasury had already disbursed R16bn of the R78bn earmarked for the power utility as per the Eskom Debt Relief Act.

“A task team has been established with officials from the Treasury, the department of public enterprises, and Eskom to monitor compliance with the conditions and report quarterly on whether Eskom qualifies for the conversion of the loan to equity.”

The MTBPS included the Eskom Debt Relief Bill.

Godongwana announced measures to assist Eskom with its debt in the 2023 budget speech in February.

“The following amounts for the requirements of Eskom are direct charges against the National Revenue Fund and attributed to the vote of the National Treasury; R78bn for the 2023/24 financial year, R66bn for the 2024/25 financial year, and R40bn for the 2025/26 financial year,” the bill said.

The Eskom Debt Relief Amendment Bill said Eskom must pay interest on the amounts advanced as a loan. On Tuesday, Eskom announced its losses had doubled to R24bn.


Transnet’s issued guarantee would remain at R3.5bn despite calls for urgent assistance from the beleaguered rail and logistics entity.

The document said the Land Bank would get the remaining R7bn of its fiscal allocation in blended finance by March 2024.

The bank remained in default after failing to meet its 2020 debt obligations. The Treasury transferred R5.1bn to the Land Bank in 2022/2023 and the government has paid R1.4bn to the bank’s guaranteed lenders.


The statement said Denel’s government guarantee would be revoked after the entity's settlement of its debt obligations. In September the entity requested R100m of its R1.9bn disbursement from the government to settle remaining debts.


The document said disputes arising from the Sanral’s Gauteng Freeway Improvement Programme limited the entity’s investment capacity.

The government took over commitments from phase 1 of the programme to allow Sanral to seek approval for a revised funding plan and invest further in the national road network.


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