COSATU: Family silver – Going, going, going…

Does absence of anti-privatisation labour protests mean that the government has abandoned its programme to sell off state assets? Dinga Sikwebu* discovers that the answer is NO!

With 2002/3 government’s proceeds from sale of state assets less than the budgeted R12-billion, newspapers and the opposition were full of comments chastising the government for the slowness of its privatisation drive. “Every year government promises to recoup an amount from the sale of state enterprises only to come back with abysmally low revenue”, says the Democratic Alliance’s finance spokesperson Raenette Taljaard. But how true are arguments that government is dragging its feet on privatisation? Government’s failure to meet its budgeted figure, is not a result of the state’s faint-heartedness on privatisation. In fact, recent government statements reveal the contrary. Addressing the national assembly during this year’s public enterprises budget vote, public enterprises minister, Jeff Radebe, pointed to the cancellation of the Komatiland forest-deal, the delay in selling a Denel stake and the Aventura liability problems, as some reasons for the 2002/3 shortfall.

Forging ahead

But he confirmed that government is forging ahead with its plans to restructure state-owned assets. “Vigorous restructuring activity during 2003 includes the 100% disposal of the loan books of Eskom Finance Company and Transnet housing”, says Radebe. According to government’s 2003/4 budget, R6,3-billion will be recouped from the sale of state assets in the current fiscal year. Targeted are Autopax, Luxrail, Freightdynamics, Viamax, Transmed pharmacies, Safcol forests and government’s remaining interests in MTN. The government also hopes that the deals that were delayed last year will go through this round. Other major initiatives this year are “preparations to dispose of 30% of Eskom’s generation capacity and to concession Durban Container Terminal”. In terms of government’s already adopted policy, 30% of Eskom’s electricity generation capabilities are to be given to “independent power producers”. Concessioning Durban’s container terminal forms part of government’s plan to grant the private sector long-term management contracts for the management of South Africa ‘s ports. December 2003 has been set as the date for appointing a new Durban operator. A swarm of consultants have been frantically working on the two restructuring projects. Since November last year, a consortium known as the Multi-Market Model (MMM) Project has been developing rules that will govern an electricity supply industry where Eskom will be competing with other power generators. “The report on the rules was to be on government’s desk on 30 June,” says Department of Minerals and Energy’s Koena Moholola.

PPPs sprouting

But the proponents of the “dragging of feet thesis” are wrong on a second count. While targets have been missed at the level of national public entities, public-private partnerships (PPPs) are sprouting all over the show while at provincial and local levels they are already blooming. By October 2002 there were 51 projects under the national treasury’s PPP unit’s regulations, says Sue Lund, from the unit. These projects entail private sector involvement in the running of government buildings and the outsourcing of government information technology functions. They also involve the concessioning of roads, other transport facilities, hospitals, schools, forests and eco-tourism institutions to privately run companies. By March 2003 an extra 44 national treasury PPP’s were in the pipeline. These exclude the contractual arrangements concluded with the private sector to run N3 and N4 toll roads and to operate the country’s two privatised prisons in Bloemfontein and Louis Trichardt.

Municipal PPP’s mushrooming

But it is not only the treasury-regulated PPP’s that are mushrooming. The Municipal Infrastructure Investment Unit (MIIU) is a government-established section 21 company aimed at involving the private sector in financing and management of municipal services such as water supply, sanitation, waste, energy and transport. MIIU concluded PPP’s “with a total contract value of over R1-billion during the 2001/2 fiscal year”. The unit’s 2002 annual report, reports that the 2001/2 deals bring the value of the unit’s contract to more than R6, 7-billion since the company’s establishment in March 1998. The report also lists 61 projects that are in the offing. So from the restructuring drivers, there is no relenting. The train is going forward. To have a glimpse of its direction, one’s eyes must focus not only on what happens to national entities but also on what occurs at provincial and local levels.

*Dinga Sikwebu is Numsa’s national education officer