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New Operating Models for SOEs in the Pipeline

July 15, 2019

Department of Public Enterprises

15 July 2019

New operating models for state-owned enterprises (SOE) will be developed over the next six months.

The public enterprises minister, Pravin Gordhan, confirmed this while delivering the public enterprises department’s 2019 Budget Vote Speech in parliament.

He added that the envisaged models will be devised in conjunction with the Boards of SOEs. Financial sustainability plans will also be developed.

The minister declared that SOE boards must become increasingly accountable for the financial and operational performance and repositioning of their respective entities.

All the instruments of SOE oversight such as Strategic Intent Statement; Shareholder Compacts; Memorandum of Incorporation; and SOE Performance Appraisal System will be revisited.

Issues that new operating models will focus on include governance and accountability, promoting the overall government objective, creating business and reducing cost of doing business in the local economy.

As regards Eskom, the minister announced that a special paper on the future of Eskom will be drawn up.

Key issues to be focused on include:

• outlining future energy environment,
• financial arrangements for Eskom,
• address the indebtedness of Eskom,
• restructuring of Eskom;
• Identify cost saving including coal costs, staffing costs and the introduction of capital efficiency;
• Operationally sustaining a high energy availability factor.

The minister also indicated that the department will cooperate with the energy department to finalise the NERSA Amendment Bill to “establish a proper recourse for regulatory decisions”.

He confirmed that the Eskom Chief Restructuring Officer will be announced soon.

A Special Appropriations Bill will be tabled in Parliament before the end of July 2019 to help stabilize the financial situation at Eskom in the short term.