Denel PMP also in dire straits


Denel Pretoria Metal Pressings (PMP) is in the same apparently sinking ship as other companies and divisions in the Denel conglomerate, being unable to supply ammunition as well as seemingly not on the right side of the SA Revenue Service (SARS).

This allegation, by Democratic Alliance (DA) shadow deputy public enterprises minister Michele Clarke, comes three months after it was revealed the Pretoria East ammunition manufacturer could not meet all its SA Air Force (SAAF) commitments.

Clarke maintains the unavailability of at least certain calibres and types of ammunition from PMP has “far reaching implications” for the SA National Defence Force (SANDF) and SA Police Service (SAPS).

She refers to last month’s civil unrest in Gauteng and KwaZulu-Natal where police resorted to using ammunition supplied by the public as the service’s own supply chain could not meet demand.

“Police,” Clarke points out, “suffered consequences when they ran out of rubber bullets and teargas on the first day of riots in July”.

In May, concern about the supply of at least certain ammunition the SAAF uses was raised by the air force two-star general heading the force development and support directorate.

Major General Setete Malakoane, in a letter to then SAAF acting chief Lieutenant General Mzayifani Buthelezi, expressed concern about Denel PMP’s ability to meet contractual commitments to the air force.

Doubts were raised about Denel PMP continuing to supply “some aircraft cartridges and small to medium calibre ammunition” with a knock-on effect on SAAF combat readiness.

Denel’s inability to pay sub-contractors impacts “negatively” on support for Samil/Samag vehicles leading to operational vehicles not being available.

Original equipment manufacturer (OEM) status for SAAF Oryx and Rooivalk helicopter systems is vested in Denel. The SAAF BCC (budget control committee) pointed out at the time: “Denel outsourced services to sub-contractors to support systems. Denel’s current financial situation created a loss of capabilities. This impacted SAAF operations and led to aircraft systems being unavailable”.

The “inadequate supply of spares is a huge unserviceability factor” with an adverse effect on deep-level maintenance for “main propulsion components” the SAAF budget watchers said.

Clarke is adamant the time has come for Denel either to be re-capitalised or sold.

Denel PMP is apparent unable to use suppliers because it is not fully tax compliant, which will be brought to Minister Pravin Gordhan’s attention. The company also finds itself in a similar situation to other Denel companies and divisions including Denel Dynamics and Denel Land Systems (DLS).

“Denel Dynamics lost most of its skilled staff and at this point in time also lost finance and capability to produce missiles – a huge security risk for the country. For Denel to honour its commitments public partnership investments must be brought on board urgently.

“Despite the urgency of the Denel situation, there is no intervention from Minister Gordhan or his department (of public enterprises). Not only does this have dire consequences at national level, if Denel’s international commitments cannot be fulfilled it could have devastating consequences on an already distressed South African economy,” Clarke said, adding legislation should be changed to ensure South Africa’s Denel needs are taken care of. This should happen before export markets are considered.

Clarke sees “the only way to save Denel is to sell it off to private bidders or put it under business rescue”.

“A bailout is out of the question. Government must find a better solution to deal with SOEs (State-owned enterprises) that continue to drain the tax base.”