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By Vhahangwele Nemakonde

Digital Deputy News Editor

Budget 2024: No new bailouts for underperforming SOEs

In 2022/2023, Eskom generated a loss of R24 billion, and continues to rely on government support for liquidity

Finance Minister Enoch Godongwana did not allocate new bailouts to state-owned enterprises, which according to the minister, have failed to implement their turnaround plans.

This has resulted in deteriorating profitability, an increased need for guarantees in order to borrow and more requests for bailouts.

“While the financial position of state-owned companies rebounded after the Covid-19 pandemic in 2021/2022, the tough economic environment and historically poor operational performance meant that their overall financial position deteriorated in 2022/2023,” said Godongwana.

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To address this, the Eskom debt-relief arrangement was introduced, the SA Post Office was placed in business rescue and a guarantee framework agreement was concluded for Transnet.

Post Office

The South African Post Office has reported net losses for the past 10 years. It was placed in business rescue on 10 July 2023, is insolvent and cannot pay creditors or meet statutory obligations.

The Post Office was allocated R2.4 billion in 2022 to fund its business rescue process approved by creditors in December last year.

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It is required to meet certain preconditions to access the funds.


Godongwana, in his 2022 Budget Speech, allocated Eskom a debt-relief arrangement of R254 billion over three years.

R78 billion of this amount was allocated for the 2023/2024 financial year, and R44 billion has already been provided to the power utility, while R16 billion was converted to equity after Eskom complied with all the conditions for the first quarter.

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“An amendment to the act has been proposed to empower the Minister of Finance to charge interest on the loan and reduce the debt-relief allocations if Eskom does not comply with the conditions,” said Godongwana.

In 2022/2023, Eskom generated a loss of R24 billion, and continues to rely on government support for liquidity


Denel was allocated R3.4 billion in 2022 for its turnaround plan and future sustainability.

“This was to enable Denel to consolidate operations, dispose of non-core assets and finalise identified strategic equity partnerships,” said Godongwana.

To date, Denel has drawn down R2.2 billion of the package to “settle statutory obligations and legacy debt obligations and to fund working capital requirements”.

The balance of R1.2 billion has been ring-fenced and will be accessible once Denel improves its financial situation.

However, Denel has not submitted annual financial statements for the last three years and remains unable to fulfil its financial obligations.


In December 2023, government provided a R47 billion guarantee to the entity to assist with maturing debt and the implementation of a recovery plan.

It has been granted approval to use only R14 billion of this amount between December 2023 and March
2024 to pay off maturing debt.

“Transnet has consistently registered below-target financial performance across its operating divisions due to a combination of economic factors, operational inefficiencies and the effect of shocks such as the KwaZulu-Natal floods on operations and infrastructure,” said Godongwana.

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It reported a net loss of R5.7 billion for 2022/2023.

“Insufficient revenue collection and high operating costs continue to reduce the cash available to fund business operations. SOEs are struggling to access capital markets without government guarantees and increasingly, request bailouts to service debt and fund turnaround plans – which is unsustainable,” said Godongwana.

“These bailouts erode policy space as they require the redirection of resources from key public service priorities such as education, public safety and criminal justice, to entities that are meant to be financially self-sufficient.”

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budget Enoch Godongwana State-Owned Enterprises