ESWACAA’S E1.3BN DEFICIT SHOCKS PAC

LOBAMBA – The Public Accounts Committee (PAC) has demanded a turnaround strategy from ESWACAA following a deficit of E1.3 billion.

The Eswatini Civil Aviation Authority (ESWACAA) incurred a net loss of E162 206 790 for the year ended March 31, 2021 and a net loss of E176 912 022 in the year ended March 31, 2020 and as such, the accumulated deficit stood at E1 348 832 659 as at March 31, 2021. The figures reflected in the compliance audit report as the Ministry of Public Works and Transport made its appearance before the PAC yesterday.  Members of the committee were shocked by the deficit, given that the authority receives a grant from government in each financial year and they demanded the aviation regulator to present a turnaround strategy. Prior to the PAC’s demand, ESWACAA’s Director Corporate Services Zanele Mavuso said due to their heavy reliance on government’s subvention, they were dealt a huge blow at the height of COVID-19 as government changed its priorities in terms of funding allocation and there was also less activity in the aviation industry.

Cost

She also stated that they invested a lot on human resource, especially because they had to maintain a certain international level which came at a huge cost. “Our infrastructure is also aging and we constantly spend a lot of funds maintaining it,” she said. As much as the committee welcomed the explanation, they wanted to find out what the authority was doing to help the situation and also lessen their heavy reliance on government subvention.  Mtfongwaneni MP Roy Fanaroukis, said if the authority continued to operate with such a high deficit, they would be in a similar situation with South African Airways (SAA), which had to be sold as it was financially crippled. “You need to give us a clear turnaround strategy because you can’t carry on like this. The sad thing is that it will be government bailing you out with the taxpayer’s money when there is nothing being done,” Fanaroukis said.
This was also influenced by the auditor general’s comment on the matter, reflected in the compliance audit report, where he stated that this meant the entire investment made by the shareholder (government) was at risk of being drained and the shareholder might be indebted to rescue the public enterprise.

Madlangempisi MP Strydom Nxumalo, also wanted to know if the company had a strategy to sell this mode of transport to emaSwati, to which Mavuso responded to the affirmative. Mavuso explained to the committee that the regulator was working on a strategy that sought to lessen their reliance on government and she was hopeful that by this coming December, it would be complete. She added that the strategy would include collecting proceeds from the local aviation space to boost their revenue. AG Timothy Matsebula’s concern on this matter was that the authority was reliant on the subvention grant from government and in the financial year under review, the authority received a subvention grant amounting to E124 099 661, which indicates a decrease of E10 281 791 (eight per cent), from the previous year’s subvention of E134 381 452. The ministry’s controlling officer, as reflected in the compliance audit report, concurred with the AG’s observation and he stated that the authority’s reliance on the subvention grant from the Government of Eswatini was correct.

Priorities

He further stated that this was true for most of the Civil Aviation authorities all over the world, particularly within Africa and the Authority was advised that the reduction (from the allocation in the Appropriation Act 2021) was necessitated by changing government priorities in the wake of the COVID-19 pandemic.The Authority suffered a reduction of about E7.5 million in landing, overflight, parking and permit fees while airport tax collections were reduced by about E2.3 million as a result of the reduced activity that was necessitated by the effects of the COVID-19 pandemic.
The controlling officer further stated that they were convinced that with the relaxed restrictions, a timely and full release of the government subvention and the improved aviation activities the authority should post better financial results beyond the 2021 financial year and this item has been a source of concern even to the authority’s leadership, hence the special mention of its going concern as stated in note 14 of the respective financial statements.

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