Although the South African government had not envisaged any initial public offerings (IPOs) from state-owned enterprises (SOEs) for the current financial year, it would consider IPOs where appropriate in the future, while concentrating on concessions, joint ventures and public-private partnership (PPP) arrangements in the current financial year, according to Minister of Public Enterprises Alec Erwin.
Addressing the National Assembly in the Public Enterprises budget vote on Monday, Erwin said that the government would consider an IPO, such as that successfully done with Telkom, “when the corporate structure and balance sheet of the SOE is strong and where we see the opportunity of lowering the cost of capital through an IPO”.
At the same time, he said that the government had determined that parastatals Eskom, Transnet and Denel, operating in the sectors of electricity, transport and defence, respectively, would remain as SOEs because of their “clear public strategic purpose”, based on an economic and financial calculation in relation to the likely conduct of the private sector and the public needs of society and the economy.
However, he left the door open for some form of privatisation of other SOEs such as Safcol (forestry), Aventura (leisure), and Alexkor (diamond mining), saying that they did not occupy a central position in their sectors. He pledged to provide “finality of intent” regarding these SOEs by the end of the year.
On the Durban Container Terminal (DCT), Erwin said he had commenced discussions with the Department of Transport and Transnet to reach agreement on certain technical aspects of the National Ports Authority Bill, which was “basically sound and a very important development”.
The Bill would be tabled once again at the earliest opportunity, and by the end of the year the department was expected to be “well advanced” in bringing a private partner into the DCT. – I-Net Bridge