The government is working on a new bill to establish a holding company that will oversee major state-owned enterprises.
The SOE bill on shareholder models, which is in the drafting phase, is a product of several processes undertaken by government in an attempt to improve their viability. The bill is expected to be informed by recommendations of the presidential review committee headed by Riah Phiyega and the presidential SOE council.
Drafters of the bill are waiting for recommendations from the Zondo commission on what changes need to be made to avoid the capture of state-owned companies by business interests.
Public enterprises minister Pravin Gordhan told parliament on Friday that the presidential council had proposed a centralised shareholding model.
“As President Ramaphosa said, SOEs play a vital role in our economy and he indicated in the 2022 Sona that the presidential SOE council, which he appointed in 2020, has recommended that the government adopt a centralised shareholder model for its commercial state-owned companies,” Gordhan said.
“This would separate the state’s ownership functions from its policy-making and regulatory functions, minimise the scope for political interference and introduce greater professionalism and manage the state’s assets in a way that protects shareholder value.”
The Sunday Times understands that the plan is to have strategic companies under one holding company. This will include big SOEs such as Eskom, Transnet, Denel and Prasa. The process is expected to be complete by the end of this administration's term.
Insiders said it would be up to the new administration whether to retain the department of public enterprises.
This comes as the government moves towards a public-private partnership in SOEs that were ravaged at the height of state capture and have been reliant on endless bailouts. Most of the SOEs are already in the process of identifying strategic equity partners, including SAA which is expected to conclude an agreement in which Takatso Consortium acquires a majority 51% stake.
The department of public enterprises, as a secretariat for the presidential council, embarked on a tour of countries that have turned around their SOEs, looking for models that could work here.
They visited China’s state-owned assets commission, Singapore’s Temasek Holdings, the Malaysian Investment Development Authority (MIDA) and France’s Agence des Participations de l’Etat.
The Sunday Times understands the government is looking at a model similar to Temasek Holdings “which serves as a central ownership model and a monitoring agency for SOEs”.
The government is waiting on several processes before making a final decision, including the recommendations from the state capture commission and the SOE bill which is expected to be passed by cabinet in the next few months.
Recommendations from the commission so far include the point that politicians cannot be trusted to run SOEs as the executive has often failed to appoint capable and qualified people.
Gordhan on Friday said he expects cabinet to approve the SOE bill soon and make it available for public comment before the end of the year.
“The necessary legal documents for the establishment of the holding company are in progress and the necessary consultations will be concluded,” Gordhan said.
The proposed legislation is expected to “supersede all current legislation governing SOEs; reduce the current burden of compliance with multiple laws and regulations; and include all subsidiaries of SOEs,” according to Phiyega’s 2012 review committee.
The committee also proposed the establishment of two central SOE authorities — one for commercial entities such as SAA, Eskom and Transnet, and the other for development finance institutions.
In addition, it proposed a council of ministers to oversee the implementation of the legislation “in relation to strategic joint planning as well as collaboration between SOEs and government departments at all spheres of government”.
Once approved, all SOEs under the department of public enterprises would fall under the new holding company. It would then be decided whether those that fall under other departments or provincial and local governments should be retained and placed in the holding company, merged or disposed of.
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