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JOHANNESBURG - The stand - off between Eskom and its employees looks set to drag on as the power utility on Friday maintained that it could not afford any wage increases.

The wage talks last week collapsed after trade unions National Union of Metalworkers of South Africa (Numsa) and the National Union of Mineworkers (NUM) walked out as Eskom stuck to its decision not to offer any wage increase.

Numsa on Thursday said Eskom had consistently offered the zero percent increase without providing audited financial statements. “They also refuse to give guarantees that there will be no corruption and mismanagement of the (state-owned company) going forward.

"We are of the view that we are suffering because of the sins of management and who through their corruption, wasteful expenditure and mismanagement have brought (Eskom) to the brink of financial ruin,” Numsa said.

Among others, the unions demand a one-year agreement, a 15percent across the board increase and a housing allowance increase of R2000. Numsa said a strike was inevitable. “We will be mobilising all our members and all workers to embark on a complete shut-down of Eskom if they continue to refuse to engage meaningfully with our demands,” said Numsa.

Eskom spokesperson Khulu Phasiwe on Friday said the negotiations had collapsed. “We have reached a deadlock. But from our side we remain ready to continue to engage with the unions. We remain available. We have also heard that the unions are talking about going on strike. People who work for Eskom are essential service workers and cannot go on strike,” said Phasiwe.

He said Eskom offered the zero percent increase because it could not afford any wage increases. He said, in a move to improve its liquidity, the power utility wanted to reduce its costs, hence the decision not to increase wages. The company has also decided not to pay bonuses.

Phasiwe said the cost-cutting measures also included reducing its capital expenditure. Eskom is currently building Medupi and Kusile coal-fired power stations. On average, Eskom spent just more than R60billion per annum on these projects. A decision had been taken to reduce that to R45bn, he said. “At this stage our coffers are simply dry,” he said.

Phasiwe said Eskom had also set its sights on its high coal costs, which he said represented a significant portion of the utility’s overall costs. He said the resolve to reduce coal costs was one of the reasons for the delay in the conclusion of any of the short-term coal contracts to alleviate coal shortages at six of Eskom’s power stations. This is despite National Treasury giving the power utility the go-ahead to sign the coal contracts.

Phasiwe said Eskom was bargaining hard with the mining companies. He said some of the companies wanted to sell the coal to Eskom at export prices. “Some of these mining companies want us to pay export prices. We are not prepared to do that. We are willing to continue to negotiate, so that we can come to a reasonable price. We are looking for a mutual relationship. By the way, we know what constitutes a reasonable price,” he said.

- BUSINESS REPORT