The Portfolio Committee on Public Enterprises has welcomed the proposal to declare the ongoing rolling load shedding a state of national disaster to assist Eskom to manage the energy crisis.

The committee voiced these sentiments during a briefing from the department on progress made in addressing the Auditor-General’s audit findings with respect to the department and its associated state-owned companies (SOCs). The committee also received an update on the SOC Shareholder Management Bill.

Briefing the committee, the department said the portfolio’s status overall remains dim. However, Transnet received an unqualified audit opinion in financial year 2021/22 for the first time in five years, while the South African Forestry Company SOC Limited (SAFCOL) received its third consecutive unqualified audit opinion.

Meanwhile, Alexkor is likely to complete its audit later this financial year, where the outcome is likely to be a qualified audit. Denel has yet to commence meeting with external auditors and South African Airways is expected to finalise its outstanding audits by 31 March 2023. The majority of the reported adverse findings are due to financial challenges and poor internal controls.

Only SAFCOL and Transnet have progressed in addressing the audit findings for the 2021/22 financial year. The other SOCs either completed their audits late or have not yet completed their audits.

Regarding the SOC Shareholder Management Bill, the department has drafted a National State Enterprises Bill that aims to provide a mechanism for the state to enhance the operational efficiency of its SOCs to achieve its developmental objectives. The Bill also aims to ensure unity of governance at SOCs and promote their commercial sustainability.

Members of the committee expressed concern about under-performance at SOCs and the excessive amounts reported by the Auditor-General on fruitless and wasteful expenditure. Further alarming the committee is the fact that some SOCs that previously were doing well are on the decline. SAFCOL, for example, reported irregular expenditure amounting to R800m, despite previously painting a rosy picture for the committee when it appeared before the committee in Parliament. Meanwhile, Transnet recorded R1,1bn in irregular expenditure and Alexkor is a disaster. Denel has not issued financial statements for two years and depends of government bailouts to continue operating. National Treasury cannot afford these bailouts, committee members pointed out.

The committee asked for details on the South African Airways deal and the department responded by saying that the airline started to generate profits in the last quarter.

The committee said action needs to be taken to address the issues highlighted in the department’s presentation. The document pointed to poor internal controls within SOCs across the board. Furthermore, the committee’s view is that unbundling various parts of Eskom creates the impression that the power utility is being privatised.

Distributed by APO Group on behalf of Republic of South Africa: The Parliament.