CAPE TOWN — Negotiations were taking place about the continuation of the Rooivalk attack helicopter project in a “modified” form, which would be markedly different from the past, said Public Enterprises Minister Alec Erwin yesterday.

The future of the helicopter is uncertain following the failure of state-owned arms manufacturer Denel to win a $2bn Turkish helicopter tender and its decision that the Rooivalk is no longer commercially viable.

The outstanding question remaining is how to service and further develop the 12 Rooivalk helicopters purchased by the South African Air Force, as Denel has indicated it would not be able to bear the cost of maintaining its capability in this regard.

Some commentators have suggested that the government should write off the R8bn invested by the state in developing the helicopter, but Erwin said, when closing the debate on his budget vote in the National Council of Provinces, that it would be possible to decide on whether there was any future for the helicopter only at the conclusion of the negotiations now under way.

In a briefing to Parliament’s finance committee yesterday, treasury director-general Lesetja Kganyago highlighted the difficulties the treasury faced in deciding whether or not to plough more funds into loss-making state-owned enterprises.

He cited the Rooivalk as an example, saying one had to decide whether to cut the losses or put in more money, in hopes of the project being turned around.

Treasury head of asset and liability management Phakamani Hadebe said if the government had decided not to assist South African Airways, it would have needed R17bn in six months to deal with the airline’s guarantees, loans, commercial paper and other obligations. For Denel, the sum would have been about R12bn-R15bn, and for the Land Bank R16bn-R18bn, he said.

Within a space of 10 months, the government’s obligation would have been about R50bn.

For this reason, the treasury had to get directly involved in the turnaround strategies of these enterprises to ensure that they were indeed turned around.

Erwin also raised concerns about the future of shipbuilding in Cape Town because of the long delays in getting environmental impact assessment approval for the expansion of the container terminal at the port.

“Massive” difficulties had been experienced with regard to the environmental impact assessment, which was taking so long that government had to reserve land behind the terminal.

This meant there was little land left for other activities, such as shipbuilding and repair.

The minister was hopeful that the country would be able to get through the process of bringing new electricity capacity on stream on the basis of a thin reserve margin, provided the process was properly managed and electricity was saved.

Erwin also told Parliament that Sasol, the world’s largest coal-to-fuels producer, was in talks with state-controlled PBMR, which was building the first pebble bed modular reactor.

“This indicates that the PBMR is in indeed a commercially viable option,” he said. With Bloomberg

With acknowledgements to Linda Ensor and Business Day.