Presidency takes charge in crucial SOEs overhaul

President Cyril Ramaphosa’s office has seized control of the restructuring of state-owned enterprises (SOEs), putting the weight of expectations on the shoulders of the minister of monitoring & evaluation, Maropene Ramokgopa.

This follows Ramaphosa’s dissolution of the public enterprises department, which was responsible for five SOEs in its portfolio, in line with the government’s aim of consolidating the shareholding of strategic SOEs into a state asset management company.

In announcing the newly reconfigured cabinet on Sunday, Ramaphosa said the co-ordination of the SOEs that were housed in the department will be located in the presidency during the implementation of a new shareholder model.

Eskom and Transnet — the backbone of SA’s energy and transport infrastructure — will, however, report directly to their respective departments.

Ramokgopa would be responsible for setting up the holding company, said presidency spokesperson Vincent Magwenya.

Sole shareholder

The state will be the sole shareholder of the asset management company but the door is open for strategic equity partners to be brought into the underlying SOEs.

Still, the collapse of a deal with a consortium led by Mamelodi-born billionaire dealmaker Tshepo Mahloele that could have injected R3bn into SAA may have soured the mood of investors, who may have been lining up cash and expertise to resuscitate failing parastatals.

The restructuring of SOEs under a single shareholding company adds responsibility to the president’s office because Ramokgopa’s ministry lies within the presidency. Ramaphosa, who has staked his political reputation on reviving the economy as he begins his second term, may not centralise power to his office but the move amplifies his influence over critical sectors of the economy.

The National State Enterprises Bill, introduced in January by Pravin Gordhan, former minister of public enterprises, is at the heart of this transformation.

The bill provides for the granting to the proposed holding company of budgetary and managerial independence, a departure from the current ownership model in which government departments oversee the functioning of their agencies.

Ramokgopa is likely to be responsible for reintroducing the bill to parliament after it lapsed in May, shortly before the end of the sixth parliamentary term.

The bill, which had to be revised after more than 3,500 people resisted the creation of a super ministry, limits Ramaphosa’s role in appointing the board of the holding company.

Instead, a panel — which will include labour, business and two members of the cabinet — chaired by a retired judge will now call for nominations and conduct interviews.

The government has pitched the new ownership model as necessary to reduce political interference, which has ultimately hurt households.

State companies from SAA and the SA Post Office to Eskom and Transnet have been financial sinkholes over the past three decades, draining billions in guarantees and bailouts. Transnet is implementing a major turnaround plan in which the private sector will be roped in to help run port terminals and rail operations.

With Tiisetso Motsoeneng

maekot@businesslive.co.za