The Portfolio Committee on Public Enterprises has welcomed the proposal to declare the ongoing loadshedding a State of National Disaster to assist State-owned utility Eskom to manage the energy crisis.

The committee voiced these sentiments during a briefing from the Department of Public Enterprises 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, operator Transnet received an unqualified audit opinion in the 2021/22 financial year for the first time in five years, while the South African Forestry Company 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 begin meeting with external auditors and South African Airways (SAA) is expected to finalise its outstanding audits by March 31.

The majority of the reported adverse findings are owing to financial challenges and poor internal controls, it said.

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.

Committee members expressed concern about the underperformance at SOCs and the excessive amounts reported by the Auditor-General on fruitless and wasteful expenditure.

Of further concern to 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 R800-million, despite previously presenting a good picture for the committee when it appeared before the committee in Parliament.

Meanwhile, Transnet recorded R1.1-billion in irregular expenditure and Alexkor is in a poor State. Denel has not issued financial statements for two years and depends on government bailouts to continue operating.

National Treasury cannot afford these bailouts, committee members pointed out.

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

The committee said action needed 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.