The National Treasury has expressed concern that the government will have to obtain most of the funding for the partnership with the Takazo consortium to acquire South African Airways (SAA).
The troubled airline was forced to save the business, and rescue experts suggested either eliminating or completely restructuring the airline.
The Takatso consortium, formed by investor firm Harith General Partners and global aviation company, became the main contender and eventually closed the deal.
The consortium, which will acquire 51% of the SAA after completing due diligence, said it is committed to a strong partnership with the state.
Although the government is not expected to promote the deal, Bloomberg reports that the National Treasury has criticized the terms of the agreement, saying the SAA is a “contingent liability” because the government may be responsible for certain costs.
The state will continue to be on the hook for unfulfilled “business bailout commitments” stemming from the company’s nearly 18-month bankruptcy proceedings, Takatso said in a separate statement.
Earlier this week, Finance Minister Enoch Gadongwana called the SAA a fiscal source, adding that the withdrawal of the government’s stake in the airline was justified.
Hodongwana and Minister of State Enterprises Provin Gordhan briefed Parliament’s Standing Committee on Public Accounts (Scopa) on the disposal of a majority government share in the SAA, the SAA’s annual report and the financial report.
“Since it was withdrawn from Transnet in 2007/8, it has cost the state 49 billion rupees to date. So there is no doubt that it was a fiscal leak, ”Godongwana said.
Takazo will be fully responsible for the work of the “new” SAA and seems to have a fairly free hand in determining the airline’s future.
The agreement provides for certain absolute rights, including the government’s veto power over certain decisions.
READ ALSO: The final gift of taxpayers of 3.5 billion rupees: what to expect from the “new SAA”.