analysis
Glenda Daniels
The state could make a hefty R175-billion from privatising just three of its top, state-owned enterprises – Eskom, Telkom and Transnet – according to BusinessMap, which this week released Restructuring 2001: In Progress, a report on the process. The three parastatals represent 77% of all state enterprises.
But privatisation is at a standstill, BusinessMap adds, and the government cannot be accused of steamrolling it.
Indeed, the report says the listings of South African Airways and the Airports Company of South Africa have both been delayed due to debt; the restructuring of both Transnet and Eskom is up in the air; a change in status for Alexkor is going nowhere and Aventura is still in the red.
Despite the general lack of progress, labour has told the Mail & Guardian it is unimpressed with the government’s intentions, which it claims are tantamount to “selling off the family silver” amid fears that privatisation will lead to dangerous levels of job losses.
Meanwhile, BusinessMap reports that Telkom’s listing is under way while Denel is finalising equity partnerships with foreign investors.
The Department of Public Enterprises has said that R18-billion will be raised from restructuring, most of which will come from Telkom’s listing. At present the government owns 60% of Telkom, with the rest, according to Restructuring 2001, divided among a Texan company, a Malaysian company, Ucingo – an empowerment group – employees, who own 2% and a national empowerment fund, responsible for 5%.
The report quotes Leslie Maasdorp, head of restructuring of state-owned enterprises in the Department of Public Enterprises, as saying it is market conditions, not a lack of commitment to privatisation, which has postponed Telkom’s initial public offer. Telkom’s has been the first major restructuring effort in the country. Black economic empowerment efforts from sales of shares, however, have been slammed by the Communication Workers’ Union as “black individual empowerment”. The union says 17000 jobs have already been lost due to restructuring.
BusinessMap says the commercialisation of the Airports Company of South Africa, estimated to be worth R4-billion to R5-billion, has been delayed because of insufficient black economic empowerment in the bidders wanting to buy out part of the company.
Aventura, says the report, with 17 countrywide resorts, has no time-scale for privatisation because of a debt burden of R100-million. Management has been outsourced to the Protea group on a five-year contract.
BusinessMap’s analysis of electricity should please the Congress of South African Trade Unions (Cosatu). The report says that the possibility of privatisation in electricity seems to have “receded”. The power crisis in California (with constant cut-offs), it says, seems to have alerted everyone to the dangers of a deregulated market.
Eskom has had major successes, the report says. Results for the year to end December 2000 showed an increase in sales of 2,8% to R23,6-billion, and net profits rose to R3,3-billion. “Eskom’s very success makes it a potentially major attraction for foreign investors and some form of privatisation has been on the cards for years. However, in light of Eskom’s achievements as well as highly publicised problems associated with restructuring in other industries, many are questioning the desirability of changing the status quo.”
According to the Minister of Mineral and Energy Affairs, Phumzile Mlambo-Ngcuka, the issue is now not about raising money but rather about “poverty alleviation and containing the upward pressure on electricity prices”. The emphasis is now “not towards introducing competition as a means of enhancing efficiency and indeed seems to envisage fewer changes for Eskom in the near future”, BusinessMap says.
While Eskom’s plans have receded, by March 2002 Spoornet will be corporatised, says the report. The restructuring of Spoornet is currently being discussed with the transport union. Spoornet is one of the few instances where genuine negotiations between the government and labour are taking place, say labour sources.
Cosatu has told the M&G it is not opposed to privatisation per se. The federation says it has serious problems with a lack of negotiation with the government over privatisation plans, about the negative implications related to service delivery and the rising costs of basic services.
Private-sector involvement in the delivery of basic services such as water, electricity and telecommunications means charges for these services will increase and service delivery will not necessarily improve, while job losses will ensue, due to the companies’ natural aim at profits.
Hence the anti-privatisation strike in August this year. Cosatu was not alone; it was joined by the National Council of Trade Unions of South Africa, along with major NGOs, church, community organisations and youth groups, including its tripartite partner, the South African Communist Party.
It appears that there is a huge disjuncture between Cosatu and the SACP on the one hand and the African National Congress on the other. But in fact, if parties genuinely looked at privatisation of state assets on a case-by-case basis, there is a possibility for some consensus.
In its most recent document, Alternatives to Privatisation, labour lists its key problems with the commercialisation of essential services.
It says there is a lack of “outsourcing accountability”. This means that consultants used by the government often have big companies’ interests at heart – which relates to its second issue, that because of big-business involvement, service charges to the poor are likely to increase. In terms of the different sectors – health, water, electricity and telecommunications – rising costs have been observed.
The question now is not whether privatisation will go ahead. It’s more a question of which state assets will be sold, how and when, and how to prevent serious job losses. This will be a central issue at the tripartite alliance summit next month, when the partners – Cosatu, the ANC and the SACP – will thrash out the issue in their discussions on economic policy.