Infraco Bill passed

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 18 Oct 2007

The creation of broadband supplier Infraco raised the danger of creating another Telkom and crowding out the private sector, says Democratic Alliance (DA) public enterprises spokesman Manie van Dyk.

Van Dyk was replying to public enterprises minister Alec Erwin`s introduction of the Infraco Bill in the National Assembly yesterday.

Passed by all parties, including the DA, the Bill will eventually become the law that governs the new state-owned enterprise that has become government`s spearhead to reduce the overall cost of telecommunications. The Bill still has to be passed by the National Council of Provinces and then be promulgated by president Thabo Mbeki before it becomes law.

"The assets of Transtel and Easitel were supposed to have been passed to [second national operator] Neotel, but were instead given to Infraco. Government wrote the Electronic Communications (EC) Act to deregulate the industry, but instead it is crowding out the private sector," Van Dyk said.

Follow the money

He also questioned why Infraco had to be listed as a schedule two enterprise under the Public Finance Management Act (PFMA). This gives it leeway to raise its own capital from the private sector, whereas Sentech, which is already well established, was not given such powers.

"...This listing [under the PFMA] means that we will see another state-owned enterprise paying out huge bonuses to its senior executives."

Van Dyk asked what had happened to the R637 million earmarked by finance minister Trevor Manuel earlier this year for Infraco. He also wanted to know what had happened to government`s obligation to pay Neotel in cash in lieu of the transfer of the Easitel and Transtel assets to Neotel.

Outgoing Parliamentary Portfolio on Public Enterprises Committee chairman Yunus Carrim (ANC) said Infraco`s creation was a case of "good state intervention" in a place where the market had failed.

"The roles of the state and the market are very difficult to determine in cases such as these. But the creation of Infraco is far-sighted," he said.

Speedier licensing

Carrim also emphasised that a public enterprise should have a speedier licensing process than that used for the private sector.

"Infraco is too big and too important not to succeed," he said.

Eric Kholwane (ANC) said the respective roles of Infraco and Sentech (government`s wireless operator) must be carefully managed. He noted that Infraco`s licensing would happen as soon as the EC Act was amended in the first quarter of 2008.

Kholwane also sits on the Parliamentary Portfolio Committee on Communications.

Erwin concluded the debate by saying Infraco would be complementary to Sentech and will not compete with it.

"We have to ensure that Infraco does not drift into another role," he said.