Parliament – Cosatu told MPs on Wednesday its proposal to use public service pension funds to cut Eskom's debt by more than half were not without risk, but that the country had run out of options to prevent it from collapsing the economy.
"It threatens to not only implode the state but also the economy," Cosatu's parliamentary representative, Matthew Parks, said to the portfolio committee on public enterprises.
He said the failure to adopt a credible plan to save Eskom, crippled by generation constraints and debt of R454 billion, would result in South Africa being downgraded by ratings agencies, with dire consequences for all citizens.
But Parks also added another, more ideologicial argument for adopting Cosatu's plan to create a state-controlled special purpose vehicle to use R254 billion in Government Employee Pension Fund (GEPF) savings, managed by the Public Investment Corporation (PIC), to cut Eskom's debt.
Firstly, it would safeguard jobs at the power utility and secondly it would preserve the state's role in the electricity sector, and in the wider economy.
"Failure to implement Cosatu's key demands for an Eskom turnaround, risks exposing Eskom workers to retrenchment and Eskom's possible hollowing out in future in favour of the private sector."
Parks said emotion risked obscuring key facts in the debate about the wisdom of a pension fund rescue effort for Eskom, including that pension payouts will not decline as a result.
"Many people, even honourable members don't always understand in the emotions of the day that the GEPF is a defined benefit, so what you receive is based on your years of service and the amount you contributed," he said.
Secondly, Parks said, the PIC has consistently been turning sizeable profits and a further investment in Eskom will see the utility account for about 4 percent of its total exposure.
"I've never heard of 4 percent threatening the other 96 percent. It is sustainable."
Not saving Eskom, he argued, would put almost all PIC investments, including the funds in the GEPF, at vast risk, he said.
"If Eskom collapses, there will be no stock market, and what is important to remember is that the PIC is invested in 1 200 companies.
"Ninety percent of the PIC investments are on the stock market. If Eskom collapses, there will be no stock market, those shares will be worthless, they will be meaningless.
"There is a risk, but if you don't intervene, you're not facing a risk, you're facing a guarantee of pension investments being lost or jobs being lost."
Academic and infrastructure expert Anton Eberhard, from the UCT Graduate School of Business, agreed with Cosatu's premise that Eskom's debt had to be addressed, warning that if the power utility were rid of all its other well-documented woes, it would still not be viable because of the repayment burden.
He said Eskom was caught in a death cycle, where a dire shortage of money resulted in tariff hikes that drove down consumption.
For the state to take on Eskom's debt would prove a "moral hazard", he said, and Cosatu's proposal of a special purpose vehicle to buy out debt and refinance it on better terms was far more sound.
The controversy came in, he said, with how and where the funds are sourced.
Eberhard also suggested accessing concessionary climate-related funding, coupled with development finance, to address the utility's generation crisis. It would see money leveraged through a greater South African commitment to reducing coal power in favour of renewable energy.
Parks said he fully agreed with Eberhard's thinking on blended concessionary funding and Cosatu saw it as part of a measure of packages of repositioning the company.
"It is part of our thinking as well."
President Cyril Ramaphosa has given his backing to Cosatu's proposal, with the provision that private pension funds also be utilised.