President Cyril Ramaphosa has once again rejected suggestions that China is a new coloniser and that his government has sold South Africa to the country by signing loan agreements for state-owned enterprises (SOEs).
“What we [government] are not in the habit of doing is handing over the assets of our country to any other country or entity, that I can assure on,” Ramaphosa said.
He was answering questions in Parliament before the National Council of Provinces on Tuesday.
The questions posed to the president focused on youth unemployment and the Youth Employment Service (YES) initiative, the Implementation of lifestyle audits, improving the governance of state-owned enterprises, land expropriation without compensation and the reaction of foreign countries and the details of the recent Chinese loans to SOEs.
Ramaphosa emphasised that it is not unusual for SOEs to raise funding through loans and that the country would continue to work on securing finances to run operations.
“South Africa remains the most industrialised country in Africa. We are going to continue using the financial muscle we can get from those who are willing to borrow us.”
These questions regarding South Africa’s relationship with China stem from the R33.4-billion loan that Eskom secured from the China Development Bank, which will be used for construction of the Kusile power station and Transnet’s R4-billion loan from the Industrial and Commercial Bank of China.
Ramaphosa revealed some information of the terms and conditions of both loans although Eskom has indicated that it won’t make the loan agreement public as this will place it at disadvantage when negotiating in the market.
Eskom will be granted a grace period of five years then the principal amount will be repayable in 20 instalments over 10 years. Ramaphosa said the interest rate charged on loan “is competitive when looking at global market”.
Another condition that the president revealed is that no Eskom assets have been used as security for loan.
“The China Development Bank is not entitled to any direct or indirect ownership of Eskom assets,” Ramaphosa said.
The funds acquired through Transnet’s loan will be used to finance the general operating activities and certain capital expenditure of Transnet.
Ramaphosa said Transnet would be responsible for paying the interest on the loan as well as the capital.
In replying to questions on the state of SOEs, Ramaphosa said that government has taken decisive steps to address the “severe financial, operational, governance and structural challenges” facing these entities.
Ramaphosa said the way boards are appointed will be relooked to bring back public and investor confidence.
“We are changing the way in which SOE’s have been working by ensuring board members are not involved in procurement processes and tightening audits.
“The appointment of new boards at strategic SOEs like Eskom, Transnet and Denel has done much to improve confidence and create conditions for operational and financial recovery.”
Government will continue to support investigations by law enforcement agencies, national treasury and the commission of inquiry into state capture into the affairs of SOEs, Ramaphosa reiterated.