Minister Gigaba tables Section 16 Notice regarding SAA bailout
The DA notes that the Minister of Finance, Malusi Gigaba, has met the obligation to report to Parliament on the R3 billion bailout National Treasury granted to South African Airways (SAA) – as required by Section 16 of the Public Finance Management Act (PFMA).
Minister Gigaba’s report raises some serious questions, which require urgent clarification before the Medium Term Budget Policy Statement is delivered in Parliament.
What exactly is the amount that will constitute the “required equity” that Minister Gigaba refers to in his report? Is it the R 5.2 billion already paid to SAA or the R10 billion that Minister Gigaba and National Treasury have recently said would be required in the 2017/18 financial year?
Another concern to the DA is that the Minister in his report to Parliament, confirmed that banks and other lenders have agreed that they would extend the 31 October 2017deadline for the repayment of the R5 billion owed to 31 March 2019, on the condition that “the required equity injection into SAA [be] tabled during the Medium Term Budget Policy Statement and approved by parliament”.
It is not practically nor legally possible for Parliament to approve an Appropriation Bill by the 31st of October. It seems that Minister Gigaba assured banks and other domestic lenders that Parliament will approve an equity injection at some date after the 31st of October 2017.
If this is the case it would be a very serious indictment and would simply reinforce the existing perceptions amongst South Africans that Parliament is just a rubber stamp for any and all decisions made by President Zuma and his cabinet.
Further concerns from the report include:
- Parliament’s approval of “the required equity injection” is not the only condition made by the lenders. The question is, therefore, what are the other conditions?
- Where will the R5 billion come from to pay lenders on 31 of March 2019?
- If the payments to SAA are going to be “budget neutral” what are the assets that are going to be sold off? Considering that Telkom withdrew the cautionary issued on the trading of its shares.
It is clear that Minister Gigaba, like an aircraft awaiting permission to land, is in a holding pattern of buying time for SAA to temporarily continue flying. The losses, by Gigaba’s own admission, will continue to mount up and will require further cash bailouts within the next two months in order to avoid the liquidation of SAA.
Quite clearly, even with the latest bailout of R3 billion SAA is still not a Going Concern. And will not be able to cover the losses in October let alone for the last four months of the current financial year. Once again the tabling of SAA’s annual report and its Annual General Meeting will be delayed. Allowing Dudu Myeni to remain in control and evade her much needed exit from the SAA board.
The DA remains convinced that the only logical action for the Minister to take is to put SAA into business rescue in order to stabilise it and then to sell the airline to the highest bidder. It is immoral to expect poor South Africans to be deprived of basic services in order to fund the losses of SAA, a mismanaged state-owned airline.
Statement issued by Alf Lees MP, DA Shadow Deputy Minister of Finance, 13 October 2017
