Minister maintains Govt has turnaround plan for loss-making parastatals

FINANCE Minister Saara Kuugongelwa-Amadhila says Government has a turnaround strategy for Air Namibia, Namibia Wildlife Resorts and the Windhoek Country Club Resort (WCCR) – all companies that milk the State of millions each year.

Kuugongelwa-Amadhila said in the National Assembly yesterday that Cabinet had decided in 2003 already to take over Air Namibia’s debt and to provide operational capital as part of a turnaround strategy. “A task force was also put in place to finalise the turnaround strategy.Both the task force and the management of Air Namibia are instructed to expedite this process,” she said without elaborating on the specifics of the strategy.She was replying to comments made by fellow Members of Parliament during the Budget debate.Kuugongelwa-Amadhila said Government was compelled to maintain support to Air Namibia “to avoid disruptions of operations”.During her Budget speech, Kuugongelwa-Amadhila announced that Government had set aside another bailout of Air Namibia to the tune of N$153 million.This is nearly five times more than Government pledged to allocate to the airline in its Medium Term Expenditure Framework tabled in Parliament last year.She said as a small operator, Government would like to see Air Namibia enter into strategic alliances to benefit from economies of scale.”I believe that Air Namibia has an important role to play, especially in the tourism market.But to realise that, the company needs to transform itself to be better able to face the challenges of the highly competitive industry in which it operates,” said Kuugongelwa-Amadhila.By the end of the next three-year budgetary period, the airline would have cost the State only a few dollars short of N$2 billion since 2000.During the 2005-06 financial year, the airline received N$116 million.Apart from the N$33 million Government pledged to give the airline last year to implement its turnaround strategy in 2006-07, it will get another N$80 million to lease, maintain and insure its aircraft and a further N$40 million to repay its loans and overdraft in this financial year.In December, Air Namibia took out loans of N$86 million from commercial banks to keep it flying.Kuugongelwa-Amadhila said a similar turnaround strategy was being implemented at Namibia Wildlife Resorts with the support of the Government.”This reform process, together with the allocations made for the upgrading of national parks, will ensure that Namibia remains a top tourist destination in the world,” she said.She said the loan guarantee agreement signed for the Windhoek Country Club and Resort (WCCR) had resulted in “a substantial burden for Government”.”The guarantee was issued for a project in an area with great potential for boosting economic growth.Unfortunately, the objective of the project was not realised, probably due to poor management, and the guarantee was called,” she said.She said the guarantee was not reversible and the Government was obliged to honour it.”But our aim is to look forward and turn this challenge into an opportunity.The turnaround strategy for Windhoek Country Club is part of the broader approach of Government to State-Owned Enterprises,” the Finance Minister said.”A task force was also put in place to finalise the turnaround strategy.Both the task force and the management of Air Namibia are instructed to expedite this process,” she said without elaborating on the specifics of the strategy. She was replying to comments made by fellow Members of Parliament during the Budget debate.Kuugongelwa-Amadhila said Government was compelled to maintain support to Air Namibia “to avoid disruptions of operations”.During her Budget speech, Kuugongelwa-Amadhila announced that Government had set aside another bailout of Air Namibia to the tune of N$153 million.This is nearly five times more than Government pledged to allocate to the airline in its Medium Term Expenditure Framework tabled in Parliament last year.She said as a small operator, Government would like to see Air Namibia enter into strategic alliances to benefit from economies of scale.”I believe that Air Namibia has an important role to play, especially in the tourism market.But to realise that, the company needs to transform itself to be better able to face the challenges of the highly competitive industry in which it operates,” said Kuugongelwa-Amadhila.By the end of the next three-year budgetary period, the airline would have cost the State only a few dollars short of N$2 billion since 2000.During the 2005-06 financial year, the airline received N$116 million.Apart from the N$33 million Government pledged to give the airline last year to implement its turnaround strategy in 2006-07, it will get another N$80 million to lease, maintain and insure its aircraft and a further N$40 million to repay its loans and overdraft in this financial year.In December, Air Namibia took out loans of N$86 million from commercial banks to keep it flying.Kuugongelwa-Amadhila said a similar turnaround strategy was being implemented at Namibia Wildlife Resorts with the support of the Government.”This reform process, together with the allocations made for the upgrading of national parks, will ensure that Namibia remains a top tourist destination in the world,” she said.She said the loan guarantee agreement signed for the Windhoek Country Club and Resort (WCCR) had resulted in “a substantial burden for Government”.”The guarantee was issued for a project in an area with great potential for boosting economic growth.Unfortunately, the objective of the project was not realised, probably due to poor management, and the guarantee was called,” she said.She said the guarantee was not reversible and the Government was obliged to honour it.”But our aim is to look forward and turn this challenge into an opportunity.The turnaround strategy for Windhoek Country Club is part of the broader approach of Government to State-Owned Enterprises,” the Finance Minister said.

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