Question: QUESTION ONE Read the following article and answer the question that follows: Sinking fast: The perilous state of SA's six big State - Owned Enterprises
QUESTION ONE Read the following article and answer the question that follows: Sinking fast: The perilous state of SA's six big StateOwned Enterprises SOEs Key state companies and agencies that play a pivotal role in driving the South African economy and distributing essential services are in disarray, as a high turnover of senior management hobbles their ability to take decisions and massive losses threaten their financial viability. The perilous financial state of some of the companies may require government bailouts, BMI Research, a unit of Fitch Ratings Ltd said in a report. We continue to see the severely weakened financial condition of stateowned enterprises as a significant risk to the countrys fiscal health, it said. These are some of the worstaffected institutions: Eskom Holdings SOC Ltd The utility, which provides about percent of South Africas power, is struggling to match supply and demand. Eskom last year stalled the signoff of governmentbrokered deals to buy green power from independent producers, which were contracted to develop plants after shortages resulted in electricity cuts from saying it had spare capacity of its own. When the government directed Eskom to conclude the accords, the utility said it would close several old coalfired plants and terminate agreements with coaltransport companies an announcement that spurred truck drivers to blockade roads in the capital, Pretoria. An investigation, which was halted by the company, showed some suppliers were favored despite higher costs. Eskom has had an acting chief executive officer since November when Brian Molefe resigned after being implicated in a graft ombudsmans report. South African Airways The state carrier expects its annual loss to widen to billion rand $ million in the year through March from billion rand the year before. SAA last turned a profit in fiscal has been surviving on government guarantees and doesnt expect to make a profit until The airline, which is being run on a temporary basis by the head of its technical unit, is recruiting a new CEO who will be its seventh acting or permanent head in as many years. The South African Social Security Agency The state welfare agency has been at the heart of a controversy thats threatened to interrupt the payment of welfare grants to more than million people. While the Constitutional Court ruled three years ago that a contract Sassa issued to Net UEPS Technologies Inc. to distribute the grants was invalid because tender rules werent followed, the agency failed to appoint a replacement and couldnt take on the job itself. On March the court castigated Sassa and said Net should continue distributing the monthly stipends for another year to give the agency time to get its house in order. PetroSA Ltd The state oil and gas company lost billion rand in the year through March mainly because of a writedown on its offshore Ikhwezi natural gas project, and a further billion rand impairment is anticipated this financial year. PetroSA sees no letup in its challenges for at least the next three years. The company last had a permanent chief executive officer in The Passenger Rail Agency of South Africa The commuter rail service has lurched from one management crisis to the next. Its CEO, Lucky Montana, was fired in after a clash with the board, which accused management of concluding a number of irregular contracts worth billions of rand and asked the High Court to annul them. Acting CEO Collins Letsoalo was fired last month, following media reports that he gave himself a percent salary increase. Transport Minister Dipuo Peters fired the entire board on March saying it had failed to exercise adequate oversight. The South African Broadcasting Corporation The state broadcasters entire board quit last year after parliament instituted an inquiry into its conduct following a series of scandals, management blunders and legal disputes. An internal report shows the entity risks running out of cash. The SABC hasnt had a permanent chief executive since The nations graft ombudsman found that the former chief operating officer, Hlaudi Motsoeneng, lied about his qualifications and the High Court barred him from working at the broadcaster
Question: If you were appointed a consultant to the South African Government, advise them on how the ten decision areas of Operations Management could resolve and improve the operations of SOEs in South Africa.
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