Manuel seeks cash for PBMR and Denel
Sep 07 2007 03:01 PM
Cape Town – Finance Minister, Trevor Manuel has tabled a special adjustment estimates bill in Parliament to cover unexpected demands for money.
The demands were not appropriated at the time of this year’s Budget and cannot wait until the normal time of year for adjustments in December.
This is only the second time in his eight year career as finance minister that he has done so.
The last time it happened, Manuel brought in a bill in order to deal with a particular flood disaster. This time it is to deal with demands being made to support Alexkor, Sentech, the Land Bank, Denel, the Pebble Bed Modular Reactor (PBMR) project and the 2010 World Cup development.
Cash was set aside in the contingency fund to finance 51% of the capital requirements of the PBMR project, subject to acceptable business plans.
Those plans were completed and submitted in March of this year, but Treasury set a “milestone” for the end of this month for a shareholder agreement to be signed.
Protecting intellectual property
According to Jaco Kriek, the PBMR chief executive, a desire to protect South African intellectual property in the design and management of the reactor has complicated negotiations with the other stakeholders – notably Westinghouse and Toshiba – and has delayed signing the agreement. An interim sum of R1.8m is now needed to keep the project going until December 31.
The West Coast diamond minor, Alexkor, has basically run out of money and has been operating at a serious loss, but the government has been prevented from shutting down the land mining section of the company because the settlement with the Richtersveld community claimants requires that it continues operating.
Also, it would cost R250m in environmental costs if it were shut down. Funds amounting to R44.7m are being sought to cover operational expenses until the end of March 2008, otherwise further debt would be incurred.
Denel’s big costs
Denel, the troubled state-owned arms manufacturer, has got into deep bother over a number of contracts, which are costing it and the government a great deal of money. One such contract is with Airbus Industries to build parts of its planes.
The company has simply not been able to keep up and has fallen behind schedule. In addition, new industrial equipment was required to manufacture composite parts.
Denel obtained an indemnity from the government when the contract was signed and a payment of R222m is now required to honour it now without incurring interest.
Cabinet agreed to the recapitalisation of the agriculture development finance body, the Land Bank, subject to conditions concerning its management and a turn around strategy.
While the treasury and the agriculture department are working on this, R700m is required to tackle a shortage of liquidity and the capital adequacy ratio of the Bank.
More money needed
Sentech needs R500m as a contribution to the capital requirements of establishing a broadband wireless telecommunication network.
This money was also approved in the Budget but not appropriated and put into the contingency reserve.
The Soccer World Cup building programme is so far ahead of schedule, or at least bang on schedule that it too urgently needs money.
Because of the need to buy such things as roofs, structural steel, reinforcing steel and the like, R1.9bn is being moved forward from the 2008/2009 allocation.
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