State-owned arms manufacturer Denel says it needs a financial injection of about R1.5 billion for its operational projects and new programmes.

The cash-strapped entity says the money would produce returns in form of investments.

Board Chairperson Monhla Hlahla told members of Parliament’s Public Enterprises Portfolio Committee on Wednesday that managing Denel’s current cash-flow leaves no room for new enterprises.

“We will come and ask to be capitalised but it will be a small amount of R1.5 billion. But for us that money will be for the projects and that we should guarantee you a return on those projects…While we are gradually becoming clever at managing our cash, we are well aware of the opportunity cost that lays there where we can’t inject money into the new contracts.”

Hlahla adds that paying salaries remains a major challenge for the company and its financial future.

This after Denel received a disclaimer from the Auditor-General’s annual report for the past financial year.

Hlahla says annual salary increases coupled with inflation are a constant headache.

Denel also says its new board has halted all contracts involving foreign governments, pending investigations.

This as it gets close to concluding investigations into an alleged deal with the government of Qatar.

Hlahla says that while Denel is not for sale, it is still open to doing business with other governments.

“There is no contract between Qatar and Denel. We will go back and look at what they were trying to do and summarise to you that we have closed that issue formally. With the Saudis, again this fact that Denel is not for sale does not mean Qatar doesn’t want to buy certain things from Denel.”