Growing government coyness about privatisation has been highlighted by the Budget, which sets low targets for the sale of state assets over the next two financial years.
Analysts say a key reason for this is that the government has consistently failed to meet targets in the past.
According to the Budget, the government aims to generate R6,3-billion from privatisation in 2003/04 and R6,25-billion the year after.
Transnet economist Lumkile Mondi points out that in the 2000/01 Budget, the government projected earnings of R40-billion from the restructuring of state-owned assets, of which R18-billion was to have flowed from Telkom’s initial public offering (IPO).
”None of that happened,” says Mondi. The 2003/04 Budget notes that Telkom’s IPO is scheduled for March 7.
It says that much of the R10,2-billion expected from privatisation in 2002/03 would come from the partial listing of Telkom. About R1-billion flowed from Transnet following the sale of its 20% stake in M-Cell last year.
The 2003 Budget review does not refer to past targets and merely states that since 1997 the government has earned R27,6-billion through the restructuring of state-owned assets, of which R18,4-billion was paid to the National Revenue Fund.
Mondi reasons that the government is being cautious because it does not want to influence the price of the Telkom offer. The Budget says that ”despite uncertainties in the global telecommunications markets and the prospect of war in Iraq, government remains confident of the success of the IPO”.
A left-wing African National Congress member commented that ”it is a bad time to sell”.
Mondi believes the government’s tight-lipped approach may also stem from sensitivity to the labour movement.
He points specifically to the lack of detail in the Budget on the government’s plans to grant concessions for the Durban container terminal. The Budget merely notes that this will be done once an economic input study report on the process has been analysed.
”It is not saying anything more than what we already know,” Mondi says.
The Congress of South African Trade Unions’s (Cosatu) economic policy coordinator, Neva Makgetla, agrees there ”seems to be some sensitivity”, emphasising that Cosatu is still negotiating with the government on the granting of concessions for ports.
”But the government has indicated that it is pressing ahead with privatisation plans, and it is still the issue with us.”
As evidence of government intentions, she alludes to the Budget review’s declaration that a 30% portion of electricity-generating capacity will be sold.
”This is the first time that the Budget has stated that the government plans to press ahead with this,” she says.
Mondi, who favours privatisation, laments the lack of detail about when the government plans to sell the Eskom stake and how much it expects to raise from the sale.
”In the short and medium term, the lack of detail may affect foreign investor perceptions that South Africa is serious about privatisation.”
Reg Rumney, the director of the BusinessMap Foundation, disagrees, arguing that the Telkom IPO and the government’s stated intentions on electricity generation are ”good indicators of the government’s symbolic commitment to a free market and liberalisation”.
He attributes the silence on the issue in the Budget speech to the fact that privatisation is not a major source of government revenue.
”It is no longer a priority in terms of revenue. Government’s major share of revenue comes from taxes,” he says.
Rumney reasons that the government would have needed revenue from asset sales if it were finding it difficult to service public debt.