South Africa’s state-owned companies will invest about R360 billion ($31.4bn) over the next three years, accounting for about 20 percent of South Africa’s gross capital formation, finance minister, Nhlanhla Nene, said on Wednesday.

Delivering his first full budget speech in South Africa’s parliament, Nene, however, admitted that the financial position of some state enterprises was unsatisfactory, undermining their ability to contribute toward development.

“Recommendations to make our public entities more relevant to South Africa’s developmental needs have been made by the Presidential Review Committee chaired by Ms Ria Phiyega,” Nene said.

“Reforms are required to ensure that state companies contribute to building a competitive economy and are not an unnecessary drain on the fiscus, and that developmental mandates are appropriately financed and serve the national interest,” he added.

Private investment and partnerships with state-owned companies were elements of the government strategy for strengthening infrastructure investment and improving service delivery.

As indicated in last year’s Medium Term Budget Policy Statement, fiscal support to state-owned companies over the period ahead would be financed through offsetting 2015 asset sales so that there is no net impact on the budget deficit.

“The required turnaround in performance and delivery on government priorities will be closely monitored, under the Deputy President’s oversight. To stabilise Eskom’s financial position, it will apply to the regulator this year for adjustments towards cost-reflective tariffs,” he said.