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The exact terms and conditions of Chinese loans to Eskom and Transnet remain under wraps, but government will not simply surrender a state-owned entity on the basis of a loan default, Parliament's portfolio committee on public enterprises heard on Wednesday morning.
A delegation from the Department of Public Enterprises briefed the committee in Parliament.
Speculation over the terms of the loans follows reports that Zambia's state power utility, Zesco, is in talks regarding a takeover by a Chinese company.
Both Eskom and Transnet have made headlines over recent financial and governance challenges.
Eskom has signed a R33.4bn government-backed loan with China Development Bank for construction of Kusile power station, while Transnet received R4bn from the Industrial and Commercial Bank of China.
Standard process
Acting deputy director general for energy Makgola Makololo told the committee that while the department was not directly privy to the terms of the agreements in question, there was an understood process by which entities accessed finances.
"In the event of a default on China loans, there will be an acceleration where the entity and government will have a period of time to settle the loan, and after that process happens, the company may go to a process where it would have to be wound down on default," said Makololo.
Acting director general of public enterprises Thuto Shomang told the committee that loan agreements that entities enter into often have a negative pledge clause, which seeks to provide the institution giving the loan with protection.
President Cyril Ramaphosa has said on multiple occasions that the terms of the loan to Eskom would remain confidential, but that government acted in the best interests of South Africans when landing the loan agreement.
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