Picture: Siphiwe Sibeko/Reuters./African News Agency
Picture: Siphiwe Sibeko/Reuters./African News Agency

Budget Speech 2020: Mboweni says using pension funds to cut Eskom debt 'not a bad idea'

By African News Agency Time of article published Feb 26, 2020

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Parliament  - Finance Minister Tito Mboweni on Wednesday said using pension fund savings administered by the Public Investment Corporation to slash state power utility Eskom's debt - as proposed by labour federation Cosatu - was not a bad idea to convert savings into equity, but added the measure should apply to the private sphere as well if implemented.

"It is not a bad idea actually but we must be very careful that we are not suggesting only public service workers pensions are to be used," he told a media briefing before tabling the 2020 national budget in Parliament.

"It must not be about the public service pension but all pensions."

Mboweni then appeared to turn the debate about shoring up Eskom back on the trade union movement by mooting more private sector involvement in the power utility, a sticking point for the Congress of South African Trade Unions, a key government ally.

"We are now at the idea that there can be private participation in Eskom and I think other ministers can look into that," he said.

Cosatu wants to keep state-owned entities in state hands to ward off any job losses associated with private sector buy-in.

President Cyril Ramaphosa and public enterprises Minister Pravin Gordhan have responded favourably to Cosatu's proposal for the PIC to use funds from the Government Employees Pension Fund to cut Eskom's debt burden by R254 billion as the power utility struggles to produce enough electricity to keep the lights on while servicing its debt.

Mboweni had so far been silent on the idea, which is vehemently opposed by the official opposition.

In his budget speech, he said stabilising Eskom to end power shortages was the government's "number one task".

"Government will do 'whatever it takes' to ensure a stable electricity supply," the Treasury chief told fellow members of parliament.

He confirmed that the state had allocated R230 billion over ten years to achieve the restructuring of the energy sector and said current electricity shortages which have forced a return to scheduled rolling blackouts would ease as Eskom completed critical maintenance work.

Wednesday's budget review cautioned that without intervention, the impact of outages and load-shedding would see a greater impact still on the economy in 2020 than the estimated 0.1 percent loss of GDP these caused in the forth quarter of 2019.

In his briefing, Mboweni brushed off further questions on Eskom by calling it a "tired subject" his Cabinet colleagues had spoken on exhaustively.

African News Agency (ANA) 

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