Chairperson, allow me to start off by making a positive remark regarding the Treasury department in saying I believe that departments are generally succeeding in providing a physical framework that supports our development goals.
There are, however, and this is perhaps the bad news, three issues of concern ... [Interjections.] ... that I want to highlight today. These relate to the lack of clarity around the state's debt obligations towards state-owned enterprises, the inefficiency of the Government Pension Administration Agency, GPAA, and then the proposed funding from the Development Bank of Southern Africa, DBSA, to underresourced municipalities, which I think is a very important issue.
With regard to Treasury and the SA National Roads Agency Limited, Sanral, Minister, you indicated that the monthly cost would be R200 million I think that is a huge amount, and I hope that we can find some solutions. People have spoken positively the ANC and about what it can achieve, but mostly in the national interest I think we need to find solutions to financial problems, and that could give us a platform for effective governance.
Cabinet's dealing with it is encouraging, Minister, but even the chairperson admitted to the question that remains: How do we solve this on par with the terms of Sanral? The uncertainty created by the poor management of the e-toll project in Gauteng has created legitimate concerns about bonds issued by the state-owned enterprises, SOEs.
Our first concern related to whether or not savings of the 1,8 million active members and 365 000 beneficiaries of the Government Employee Pension Fund, GEPF, had been put at risk. This is an important issue and I think people out there still do not know whether there is a risk for them in regard to the pension fund or not. With the fact that the GEPF holds 50% of Sanral's issued debt, we know of only R8 billion of GEPF's R15,7 billion in investments in Sanral that have been secured by government.
On Friday, 11 May I met with the chairperson of the board, Arthur Moloto - I do not know if he is present here today - to discuss the potential impact of the financial distress in Sanral on GEPF investments. I was assured that Sanral's debt does not threaten the pension money of government employees, mainly because of the fact that it is an enormous entity with huge assets and the R15 billion held in Sanral bonds makes up only 1,5% of the GEPF total assets.
The state has guaranteed 53,2% of the R15 billion investment in Sanral. It is the largest shareholder in the Johannesburg Stock Exchange, JSE. This is a significant achievement and it is thus not only exposed to SOEs but also, importantly, to section 10. This is what affects us as parliamentarians. The SA National Roads Agency Ltd and National Roads Act has determined in section 10 that only Parliament can enact legislation to liquidate Sanral. I hope I am correct in this, that somebody has made a study of it. I think we should seriously look into this at our next portfolio committee meeting. Or it could be placed under judicial administration.
This effectively implies that the state could be held responsible even for the nonguaranteed portion of Sanral's debt. While this is our concern, it is also important for the pensioners out there. With the implications of the e-tolling debate for the GEPF, it does raise questions around the bigger issue of bonds issued by other state-owned enterprises.
If government is serious about involving the private sector in its planned infrastructure build programme, which will be spearheaded by the state- owned enterprises, SOEs, it will have to act decisively to create certainty around its responsibilities in the bond market and its capacity to service its debt. The Minister indicated this morning the importance of business. He even mentioned that business changes economic prospects, and that it is possible that business will drive and business will lead.
I have written to the National Treasury to request that they quantify the government's debt obligations and the implications of our debt for the gross domestic product, GDP, ratio. This is an important issue and we should have clarity on this.
Businesses and investors can adjust to both good and bad news. I know when the markets go up, people might sell and businesses will take the profit. When the market goes down, they might even take the loss. What they will not take is if we do not respond well because of a lack of policy, or the lack of how specific problems will be solved.
Economists have warned here that the poor management of the e-toll project in Gauteng and the resulting uncertainties around the indebtedness of our SOEs may lead to an adjustment in South Africa's overall credit rating. I think my colleague has alluded to that.
On the issue of the R20 billion, we still do not have concrete answers on how we are going to fund it. I know there is an intention and Cabinet should come up with proposals. I think time is of the essence, Minister.
In regard to the Government Pensions Administration Agency, GPAA, we have a different view and we have discussed it briefly at portfolio committee level. Let me explain our view. It is well known that GPAA provides a pension administration service to the Government Employees Pension Fund, GEPF, and National Treasury. In the 2012-13 financial year the entity was paid R666 million. It is an enormous amount for services, of which 93% is recovered by the GEPF and, I think, 7% by Treasury.
We have to note that GPAA's expenses are recovered from the GEPF using the number of members administered at the base for cost allocation. This methodology is interesting. The GPAA is thus delivering a service to Treasury and the GEPF at a cost of - this is an estimate and I think we have discussed it - an estimated R36 per person. This is an estimation of cost in the market.
It seems that GPAA is experiencing serious challenges regarding the capacity of staff and keeping complete and accurate member data. I think they are still in the founding stages. We hope that, perhaps next year, we will have a better report in this regard. The DA, at this point, can call for outsourcing of the administrative functions of the GEPF to appropriately capacitated, credible, private institutions. What I believe we can save - this is a financial committee, we have to talk about finances, and we will do a presentation to the Minister in this regard - is R178 million per year. Those are the savings that can be achieved in this manner.
Let me just come quickly, before my time runs out, to the Development Bank of Southern Africa and the proposed recapitalisation. The question is: How much will this recapitalisation be? Will it be R110 billion in cash injections from government to address infrastructure backlogs and weak institutional capacity in the 158 underresourced municipalities? Now we realise we need to get to a turnaround strategy in these municipalities and we have to improve the infrastructure in the municipalities. We also have to watch the finances so that we do not just throw money at the problem; that is not the correct thing. We need to have the correct policy to see that everything is in place and that we indeed get value for our money. That is just in conclusion.
In recent years municipalities have distinguished themselves as not being reliable debtors. Just as an example, 84 municipalities are in arrears with Eskom to the tune of R533 million. That does not seem like a good investment, but I know the problem. We have to solve it. I think we have to put our heads together on how the problem will be solved.
Finally, Minister, we need to provide certainty on your obligations with regard to the financial health of the SOEs, and to curb unnecessary expenses on agencies like GPAA. We also need to ensure that institutions tasked with providing development financing, like the Department of Public Service and Administration, DPSA, do not make unsustainable funding allocations at the expense of the South African taxpayer. Thank you. [Applause.]