The South African Institute of Race Relations is reporting that only five of the nine state owned enterprises reporting to the Department of Public Enterprises were profitable in the 2009 – 2010 financial year. The taxpayer makes up for the shortfalls.

While the state owns other organisations, they are not accountable to the Department of Public Enterprises.

Jonathan Snyman, a researcher at the South African Institute of Race Relations, offered the following insight:

The biggest concern with these results is that the government will have to support loss-making entities at taxpayers’ expense.

South Africa’s infrastructure is already under strain, and without money derived from profits to develop new projects, the prospect of alleviating pressure on infrastructure is dependent on finding alternative forms of capital for investment.

According to the statement issued by the SAIRR, Transnet was the most profitable parastatal, showing a profit of R3 billion.

The other four that performed well during that period were the Pebble Bed Modular Reactor, South African Airways, South African Express, and the South African Forestry Company.

They produced a combined profit of R4 billion.

The least profitable parastatal during that period was Eskom, which posted a loss of over R9,7 billion, but it had since turned this around and posted a profit of R13 billion for the 2010 – 2011 period.

The other three that posted losses, Alexcor, Broadband Infraco and Denel, posted losses for 2009 – 2010 totalling a combined R310 million. This meant the total loss of all four entities was R10 billion, equating to a net loss of R6 billion.

The Institute’s analysis was based on the annual reports of all nine state owned enterprises.

The South African Institute of Race Relations will release its full report in Johannesburg next week.

The total assets of all state owned enterprises in 2009 – 2010 amounted to over R450 billion, and the Department of Public Enterprises is the shareholder representative for the government with oversight responsibility for all nine of the enterprises.

[Source: IOL]