SAA remains a financial burden for S. Africa, Treasury warns

South Africa’s decision to sell a majority stake in the country’s loss-making national airline represents an ongoing financial risk to the state as the terms were skewed heavily toward the buyer, the National Treasury said. The finer print of the deal that saw the Takatso Consortium take a 51% shareholding in South African Airways last year represents a “contingent liability,” the Treasury said in a document emailed to Parliament’s Standing Committee on Public Accounts that was later withdrawn. That’s partly because Takatso -- made up of a local jet-leasing company and private-equity firm -- has the right to assess whether any ongoing liabilities in SAA be settled by the government, the Treasury said in the document seen by Bloomberg. The emergence of the concerns came as Public Enterprises Minister Pravin Gordhan was set to appear before the public-accounts committee. Gordhan, a former finance minister, had made the removal of SAA from the state roster a key tenet of his role overseeing he Department of Public Enterprises, which also counts debt-laden utility Eskom Holdings SOC Ltd. among its responsibilities. The terms “may result in the state providing funds in excess of its shareholding,” the Treasury said. While the letter was withdrawn, Finance Minister Enoch Godongwana said at the hearing that the National Treasury didn’t participate in the sale process and the substance of the “letter stands.” The department said it wouldn’t comment further on the document because it had been withdrawn and referred questions to the DPE.<br/>