Drew Forrest
The government and labour are on the brink of an agreement that would mean the dropping of a state plan to break up and concession a major part of Spoornet’s freight business to private operators.
Earlier this week the Department of Labour’s head of restructuring, Leslie Maasdorp, suggested that the listing of SAA would be postponed for at least two years.
Department of Public Enterprises Director General Sivi Gounden later repudiated him, saying Cabinet had made no final decision on SAA. Gounden strongly denied the state’s privatisation programme was in withdrawal on a broad front.
The perception in the Congress of South African Trade Unions (Cosatu) is that the government, ideologically bent on privatisation, had adopted a range of hasty and incoherent strategies. Adverse market conditions, the parlous state of some targeted companies and mounting union resistance are now forcing a rethink.
Earlier this year Minister of Transport Dullah Omar dropped concessioning plans for Metrorail and announced that the listing of the Airports Company of South Africa would be held over until 2004. Initially targeted for November, the Telkom listing has been put forward to the first quarter of next year. Omar is seen as one of the Cabinet doubters about the merits of privatisation.
On Spoornet the imminent union-government deal follows seven months of negotiations in a technical committee, also involving management, looking at a 20-year plan for investment in the rail sector.
The government’s original plan had been to hive off and concession the profitable coal link to Richard’s Bay and Orex iron ore line. The unions have consistently argued this would fatally injure the general freight business, which depends on cross-subsidisation from the two lines.
Cosatu officials declined to comment on the agreement, which still has to pass through the structures of the National Framework Agreement and Cabinet. However, a well-placed source says a settlement of the matter is imminent and it is likely that the coal link will remain part of an integrated state rail company.
On Orex the government is looking at a public-private partnership that will “factor into” the problems of the Saldanha Steel plant.
Another source says: “The transport department was in a bind, because it is also policy to increase freight volumes. This couldn’t happen without Orex and the coal link. If they had been sold off, the government would have been forced to subsidise the other freight operations.”
The source says the general approach of the Department of Public Enterprises is to compartmentalise different business units. In Spoornet, however, the three freight operations share considerable infrastructure.
On the broad privatisation picture, South African Transport and Allied Workers’ Union policy officer Jane Barrett says the government is coming to realise that the assets it planned to sell are worth less than originally estimated. In addition, the anti-privatisation strike has created space for dissenting voices. She doubts, however, that the state’s underlying commitment to privatisation has weakened.
Adverse market conditions and the poor outlook of some entities, however, are emerging as a more potent obstacle to privatisation than the labour movement.
It is strongly rumoured that SAA, whose delayed results are expected later this month, will report a loss. Airline stocks are in the doldrums worldwide and are expected to take further punishment after this week’s terror attacks in the United States.
Gounden said it would be premature to comment on SAA’s listing prospects. The results will have to be analysed, and any losses assessed for the turnaround potential. Telkom’s listing will happen, subject to market conditions, and he believes it is feasible during the current fiscal year.
The announcement of the delay over SAA has raised concerns of a more widespread slowdown on the government’s privatisation programme.
Tony Twine, an economist at Econometrix, says the postponement of key privatisations to a time closer to the next election could also cause a further round of delays. “The further that these privatisation realities get pushed towards the 2004 election the more uncomfortable it becomes in terms of party politicking.”