By SVEN LUNSCHE

STATE-OWNED forestry company Safcol has blamed "understandable, but unprecedented involvement in its management by government" for a 41% plunge in profits in the 1995/6 financial year and an expected decline in earnings in the current year.

Safcol chairman David Gevisser writes in the group's annual report that state interference on a number of fronts "is in conflict with the culture we have nurtured since our commercialisation three years ago - that of maximum sustained profitability".

Safcol is one of the parastatals earmarked for partial privatisation. Its boss, Public Enterprises Minister Stella Sigcau, confirmed on Friday that it would be privatised "sooner rather than later" and that South American and New Zealand companies had shown interest.

Gevisser says Safcol was hurt by falling pulp prices and "the weakest market for sawmill goods in recent memory".

Turnover in the 12 months to end-June rose by 30% to R467-million, but net income declined to R19-million from R33-million after capital spending was raised by 113% to R89-million. The dividend was cut to R5-million from R11-million.

Gevisser said government involvement in Safcol was evident in three major areas: the new forestry policy by the Department of Water Affairs and Forestry, its support of neglected forests in the former homelands and a wide-ranging Competition Board inquiry into its affairs.

The board is investigating allegations by three of Safcol's customers that the parastatal has been abusing a dominant position in the sawlog market by sharply raising log prices and significantly tightening up on other contract terms.