Bill gets bigger for South Africa's state-owned companies
By Russel Padmore
State-owned companies in South Africa, which are deep in debt, are costing the country billions to keep afloat and the bill is getting bigger.
Bailing out loss-making national companies has been a long-term drain on the government's budget, but these companies which are major employers are likely to need more money to survive because of the coronavirus pandemic.
The South African Post Office has requested $293m (£222m), the airports operator, Acsa, has applied for about $200m and the national broadcaster, SABC, also wants additional funds.
SABC says its finances got worse because it replaced revenue-generating programming, with expanded news and educational coverage, because of the Covid-19 pandemic.
The weapons manufacturer Denel also faces bankruptcy, although it insists it does not need more state funding.
However, that denial is at odds with a request for special funding to support its position as a necessary supplier of military equipment to protect the security of the state.
The fate of bankrupt South African Airways is another problem the government needs to solve and the administrators who have put together a rescue plan for the carrier have made an injection of state funds a necessity.
The biggest financial problem is presented by the troubled national electricity supplier Eskom which is struggling to provide enough power and is introducing more rationing or load shedding as it is known in South Africa.
The reduction of power supplies is a challenge to industries in South Africa, notably the country’s mining sector which is a key exporter.
Eskom was deep in debt before the pandemic, struggling to generate enough electricity, because its ageing power stations require modernisation.
However when the economy stalled amid the coronavirus lockdown, the company's revenues collapsed.
South Africa, which has seen its international credit rating cut to junk, could see its budget deficit slide further into the red, as it spends more money bailing out state enterprises.
This article originally appeared on BBC News
Photo: Reuters