Government assistance to Denel totalled R9 billion in five years

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Beleaguered State-owned defence and technology conglomerate Denel benefitted to the tune of R9 billion from National Treasury (NT) over the past five years at the same time as it recorded personnel losses of just on 60%.

The R9 billion in bailouts was, according to the reply to a Parliamentary question posed by Democratic Alliance (DA) member of the Public Enterprises Portfolio Committee (PEPV), Farhat Essack, one of six made to State-owned Enterprises (SOEs). Denel, according to the response attributed to outgoing Public Enterprises Minister Pravin Gordhan and Department of Public Enterprises (DPE) Acting Director General Jacky Molisane, did not pay out any dividends in the five-year period starting May 2019.

By way of explanation for government’s financial commitment to SOEs, Essack was informed “all entities were affected by state capture” with five impacts named. They are listed as financial and liquidity positions, increased operating costs, skills “eroded”, boards “compromised” and there was “a technical impact on operational performance”.

2019 was the starting point for another DA Denel question to Gordhan. This one was from Mimmy Gondwe, shadow public enterprises minister, asking about personnel numbers.

She was told personnel strength in 2019 was 3 968. By the end of the 2023/24 financial year it stood at 1 655 – a loss of just on 60% – prompting at least one Armscor pensioner to ask whether the Denel salary bill decreased accordingly.

Other SOEs Essack asked about included the national airline – SAA – which he was told did not receive bailouts. The response to Essack’s question has it that it was “capital invested” to the tune of over R31 billion between 2019/2020 and 2023/24, with the funds going to working capital, bridging finance, settling legacy debts and restructuring, among others.

Only Alexkor and SAFCOL (SA Forestry Company Limited) were not financially assisted by government in the last five years. Eskom received R234.6 billion and Transnet R11.6 billion (made up of a R5.8 billion “equity injection”, R2.9 billion to “accelerate” locomotive rehabilitation and a similar amount to cover losses incurred in the April 2022 KwaZulu-Natal floods) during the specified timeframe.