ACDP questions GEPF on PIC investment in Sanral
ACDP MP and member of the Standing Committee on Finance, Steve Swart , this morning questioned representatives of the Government Employees Pension Fund on the impact of its investments in Sanral bonds, following Saturday's interdict indefinitely postponing the implementation of the Gauteng e-tolling project.
"While the ACDP fully supports the indefinite postponement of the Gauteng e-tolling project, we were concerned about media reports that the Government Employees Pension Fund (GEPF) was at risk due to its R15.7bn investment in Sanral bonds and the indefinite postponement of the e-tolling project. In order to clarify matters, I today requested the acting Principal Officer of the GEPF, Mr John Oliphant, to explain what impact this delay would have on the GEPF investment (via the Public Investment Corporation (PIC)) in Sanral.
Mr Oliphant explained that the GEPF had more than R1trillion invested in bonds, equities and other instruments via the PIC. He explained that when the initial investments were made in Sanral, it had a triple-A credit rating, and offered a high bond yield of between 9.75% and 12,5%. This was before a negative watch was placed on Sanral by credit rating agencies. He advised that while the GEPF's R15.7bn bond investment in Sanral amounted to 50% of the total bond investment in Sanral, 50% thereof was guaranteed by government. The other 50% was held by other private asset managers. This means that approximately R8bn of the GEPF's bond investment in Sanral may be at risk.
We appreciate Mr Oliphant's explanation and, by implication, his assurance that government pensioners are not unduly at risk, given that government underwrites the GEPF. It is, however, very clear that Sanral's ability to service its debt has been severely impacted by the indefinite postponement of the e-tolling project, and that it may have to be bailed out by government. This may, in turn, place additional burdens upon the tax-payer, should government not be able to find alternative sources of funding.
The ACDP will consequently be calling on the Minister of Finance to address these issues when he and National Treasury appear before Parliament next week. We will also be interested in ascertaining whether National Treasury was at all times aware of the funding model proposed by Sanral for the e-tolling project, particularly when it decided to grant Sanral R5.75bn additional funding earlier this year."
Statement issued by Steve Swart MP, African Christian Democratic Party, May 2 2012
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