Struggling power utility Eskom on Thursday said that it had begun reducing its bloated headcount through a multi-million rand voluntary separation packages (VSP) targeted at senior employees. Photo: Siphiwe Sibeko/Reuters
JOHANNESBURG – Struggling power utility Eskom on Thursday said that it had begun reducing its bloated headcount through a multi-million rand voluntary separation packages (VSP) targeted at senior employees.

Eskom said it would spend R400 million to rationalise its management layers in order to run the utility efficiently.

It said there would be no forced retrenchments during the process to be implemented during March and April.

“Eskom will ensure that no critical skills will be lost as a result of the programme, and management will take every precaution to ensure that the VSP process caters to the best interests of Eskom,” it said.

Eskom said the money spent during the VSP process would be recouped through savings within a year.

It said the packages would be offered to employees above the ages of 60, regardless of whether they are in core, critical or non-core positions.

Old Mutual Investment Group chief economist Johann Els said the VSPs would help in reducing the utility’s headcount.

“The wage bill within Eskom is too big a part of their public expenditure fund,” Els said. “But all of this will take a long, long time to reduce Eskom to where they are sustainable.”

The move comes as the Public Investment Corporation said that it was keen to engage with various stakeholders to find a suitable and sustainable solution for the systemic risk posed by Eskom to the economy.

The troubled power utility has been struggling with an unsustainable debt burden and rising operational expenses.

Eskom’s debt of around R454 billion has been cited as representing a very serious threat to the economy and country.

It is expected to report a second consecutive loss of R20bn for 2019 as sales volumes continue to decline.

This month Cosatu proposed that the PIC should shoulder half of Eskom’s debt.

The PIC manages in excess of R2 trillion on behalf of clients that include the Government Employees Pension Fund, Unemployment Insurance Fund, Compensation Commissioners’ Fund and several others.

The PIC said that should it receive a proposal to further invest in Eskom, it would follow its governance process as outlined in the investment mandates to arrive at a decision.

It believed a long-lasting solution should address, among others, Eskom’s growing debt burden.

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