Ramaphosa, Gordhan like Cosatu's idea of using PIC's R250bn to reduce Eskom's debt
CAPE TOWN – Trade union group Cosatu’s proposal that the state-owned asset manager, the Public Investment Corporation (PIC) and local development finance institutions help to lower Eskom debt by around R250bn, was met with mixed reactions on Wednesday.
President Cyril Ramaphosa was “favourably disposed” to the notion, as was Public Enterprises Minister Pravin Gordhan.
The Democratic Alliance rejected the idea, an environmental and economic sustainability agency, the Alternative Information and Development Centre (AIDC) endorsed the idea, while auditing firm Mazars noted that there was no right or wrong answer, but an investment of workers pensions would have to be accompanied by operational improvements and greater fiscal discipline at Eskom.
Ramaphosa said any steps that were taken on Eskom’s debt “should not undermine the investment mandates of the PIC or other affected institutions,” his spokesperson, Khusela Diko said yesterday.
The DA said the Cosatu proposal would result in billions of rands in state employee pension funds being redirected to bail out a “collapsing and defunct Eskom.”
“If the GEPF approves this Cosatu proposed bailout for Eskom, state employee pensioners will never see their money again,” said DA MP Geordin Hill-Lewis. The AIDC said “the growing crisis at Eskom and other state-owned entities had reached a point of no return. The crisis at Eskom was multifaceted, including overdependence on coal, mismanagement, and corruption.”
It said the solutions to these problems did not lie with unbundling and privatisation. Instead, it required Eskom to remain a public utility and for the utility to play an active role in a just transition to a low carbon economy.
As to the question of where the money would come from, the government was pushing the Special Appropriations Bill that would allow the state to direct additional resources from the fiscus to finance Eskom’s debt.
“This transfers the cost of the Eskom crisis onto the poor and working class. Instead, the government as a creditor should speak to itself as a debtor. Here the PIC can play a critical role. The PIC, by being a combination of workers and public money, presents a great vehicle to address Eskom's financial crisis,” the AIDC said.