South Africa to decide on future of state-owned firms by year end: Treasury DG

By Mfuneko Toyana JOHANNESBURG (Reuters) - South Africa will decide by the end of this year which state-owned companies would be privatised or closed as the government cuts spending amid slow economic growth, a senior Treasury official said on Friday. Many of South Africa's 300-odd state entities are a drain on the government's purse and a team commissioned by President Jacob Zuma to review the companies recommended that some companies should be sold. Treasury said in its 2016 budget review the government was implementing recommendations of the committee and would examine private sector participation in the state-owned companies. "I can say without fear of contradiction, before the end of this year, it will be possible to go beyond just the technical analysis and reporting and begin now to point at which entities have got to folded and which ones must be merged," Director General Lungisa Fuzile said on CNBC Africa television channel. His comments came after S&P Global Ratings affirmed South Africa's investment-grade credit rating, but kept its negative outlook citing low GDP growth. South Africa’s state-owned firms range from SAA to power utility Eskom and logistics group Transnet, among others. Finance Minister Pravin Gordhan said in his February budget speech that Africa's most industrialised nation would explore merging two of its state-owned airlines, South African Airways (SAA) and SA Express, and seek a minority equity partner for the company. President Jacob Zuma has ruled out privatising SAA, which is in the middle of a turnaround strategy led by Gordhan. Zuma also said Eskom had turned the corner, declaring that South Africa would never experience power cuts after the utility was forced early last year to impose almost daily power cuts as demand outstripped available capacity. Following S&P's decision on Friday, Eskom said in a statement that stable power supply had helped South Africa avert a credit ratings downgrade. S&P said in its statement that "energy sector improvements will likely reduce some of the economic bottlenecks." Eskom's Chief Financial Officer Anoj Singh said in a statement that the utility would keep its power supply steady. Power cuts, a commodities downturn and a severe drought that has hit agricultural output have been blamed for slow economic growth, which the Treasury forecasts at 0.9 percent this year from 1.3 percent in 2015. (Writing by Olivia Kumwenda-Mtambo; Editing by James Macharia)