Necsa is in dire financial straits, will need a bailout to pay salaries – Union

Necsa is in dire financial straits, will need a bailout to pay salaries – Union

JOHANNESBURG – The National Education, Health and Allied Workers’ Union (Nehawu) has warned that the SA Nuclear Energy Corporation (Necsa) would struggle to pay staff salaries this month if the government failed to give it a once-off bailout.

Nehawu said in a turnaround strategy document that Necsa needed government assistance to stabilise its cash flow problems.

The union, which is the largest at Necsa, described the situation as a direct and immediate threat to the company’s sustainability and the job security of its employees.

The strategy document, dated September 27, charges that the board and management were not showing commitment in addressing the corporation’s cash flow problems.

“This is a primary objective in the short term, because irrespective of the savings that can be made this will be crucial to ensure the survival and growth of Necsa,” the union said. 

Nehawu’s Necsa branch chairperson, Zolani Masoleng, said the Necsa board appointed by former minister Jeff Radebe had no plan to take the company forward.

“Since they came in – in December – Necsa’s cash flow problem has been becoming worse,” Masoleng said. 

He said acting chief executive Ayanda Myoli told the portfolio committee on mineral resources and energy during an oversight visit to the company recently that the organisation had a cash flow projection of negative R325 million for the 2019/20 financial year. 

“Unless urgent and serious efforts are made, there is a great possibility that there might be insufficient funds to pay salaries from November 2019, if management is to be believed. How the cash flow situation that has been hovering over R100m for the past few years has been allowed to get to this point is unacceptable,” Masoleng said. 

The union proposes interventions, including cutting expenditure, and an increase in income, arguing it was a viable option. 

It recommended that the rental of property to state-owned entities be considered as an option to increase income as a short-term measure to generate revenue.  

“There is approximately 50 000m² of warehouse space and 10 000m² of office space vacant at Necsa. The current average rate of warehouse space is R40/m² and office space is R100/m², this has the potential to bring in millions in income,” said the union. 

Nehawu said the maximum expected savings from all interventions was R100m and might still be less than the projected cash flow shortfall.

Nehawu said one of the fundamental problems at Necsa, which was costing millions in litigation each month, was the continual battle between management and the various boards, as well as Radebe over levels of authority.

“Former minister Jeff Radebe engineered a crisis and destabilised Necsa by unlawfully removing the previous board for dubious reasons. The current board, which is a beneficiary of unlawful action of Jeff Radebe, embarked on a misguided path to narrate the governance and finances of Necsa in a very biased manner to give legitimacy to the agenda of Jeff Radebe and his allies. As long as this is the case, this board will forever be in court wasting millions as opposed to running the organisation properly,” it said.

Neither Necsa nor Radebe were immediately available for comment.