None of South Africa's State-owned enterprises are for sale, Public Enterprises Minister Barbara Hogan said on Tuesday.

She, however, declined to entertain what she termed a "passé debate" on the merits of privatisation.

Hogan, who incurred the wrath of the ruling party this month for suggesting loss-making parastatals may be cut loose, told reporters: "I do not envision setting up any of our State-owned enterprises for sale.

"The assets we now have in our fold are extremely important assets as engines of the economy."

She said the country's parastatals should retain some of their historical function in the sense that under apartheid they were used "in an almost admirable fashion" to provide the infrastructure that drove the economy.

Pointing to Transnet, she said though an extensive overhaul of the freight provider in recent years resulted in non-core assets being sold off, its had retained its primary capacity, without which the local economy would grind to a halt.

"If we do not get freight rail up and running in the way that it should be, we are doing a disservice to the economy.

"Transnet has gone through a very painful transformation process, but we did not sell off the core functionality and that is what shapes our attitude to privatisation."

Hogan said rigid ideological thinking about selling of State assets was outdated.

"The privatisation debate, particularly during the Thatcherite era, become particularly ideologically driven. It is a fairly old debate and it is a fairly passé debate in many ways.

"At that time, either you privatised and saved companies from incompetent government monsters and from the other side, from the union side, privatisation is selling off the family silver.

"The world has moved on from rhetoric on either side of the debate."

The Telkom issue

Hogan cautioned that the privatisation of Telkom had mixed results, notably the subsequent failure of the private sector to provide cheap broadband access to the wider population.

During the budget debate on public enterprises, she told opposition MPs demanding South African Airways be sold off, that privatisation was not an easy solution as it would require extensive recapitalisation to find buyers for loss-making entities.

She said it would also be an insult to 2000 SAA workers who were retrenched as part of the airline's restructuring and added that previous management was to blame for costs "bedevilling" the company's return to profit, like the penalty incurred for cancelling an Airbus contract.

"Are we going to say to those people who lost their jobs that it was all in vain?" she asked.

But she cautioned that government expected parastatals to break even and that it was impossible for the Treasury to provide repeated bail-outs or to pay for the vast infrastructure investment programmes in the pipeline at companies like Transnet and Eskom.

Instead they would have to develop sustainable funding structures. In the case of Eskom this was "an absolute priority".

The embattled electricity provider plans to spend R385-billion over the next five years to increase its capacity, which it ultimately hopes to double by 2026 at a cost of more than R1-trillion.

It is asking the National Energy Regulator of South Africa (Nersa) to approve a 34 percent tariff hike for this year, but the increase in revenue this will provide, will only cover operational costs.

Hogan said Treasury could not make up the shortfall, and the company would have to rely on borrowings, coupled hopefully with a more realistic electricity price, to fund plans to build more power plants.

But the current uncertainty over tariffs meant it was not clear how much debt servicing the company's balance sheet would allow.

It would therefore help parastatals like Eskom and Transnet, which saw Nersa slash its pipelines tariff by 10.4 percent in March, if national regulators could be more transparent, the minister said.

If padding tariffs to pay for future infrastructure expenditure was not allowed, South Africans ran the risk of companies recovering the cost after completion, which would result in "volatile" utility prices, she warned.

Sapa

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