National Treasury has suggested that Eskom could look at cutting the salaries of its top earners in a bid to safeguard jobs.
Director-general Dondo Mogajane has also revealed that the government may have to funnel additional funds into the ailing state-owned entity in addition to the R26 billion already earmarked for it through the special appropriation bill.
The bill introduced by Finance Minister Tito Mboweni last month requests approval for additional finance support for Eskom outside of what had been budgeted for in February.
Mogajane appeared before Parliament’s standing committee on appropriations this morning.
Members of the committee called on the director-general to reveal the conditions that would have to be met by Eskom in order for Parliament to give the green light to the special appropriation bill.
Mogajane insisted that more detailed conditions would be outlined when the committee met with Eskom and the department of public enterprises in 10 days’ time. However, he warned that if Eskom’s mismanagement continued, the government would have to be bail it out again in March.
“Failure to execute the funding plan may result in Eskom experiencing liquidity shortfalls at March 31 2020 and require additional funding in addition to the funding provided through the special appropriation bill.”
With a disclaimer on the possible backlash to his proposal, the director-general urged labour to come to the table to talk about what “sacrifices” could be made in order to cut costs at Eskom and other state-owned enterprises.
“Cost reduction, like for any entity in the state, can come in many forms. The labour costs leave much to be desired at Eskom and that must be addressed and faced head-on. We must be creative in the way that we approach Eskom,” he said.
“If we want to maintain the number of employees in Eskom then each one must get a smaller size of the cake ... so that everyone must enjoy. This is a tough conversation that we must engage with as we continue to engage and fund Eskom from the purses of the state. This is all tax revenue,” Mogajane said.
He went on to say that skimming off the top could save jobs.
“If an executive in Eskom is earning R2 million today, can that executive earn R1.8 million tomorrow? I am not talking low-level employees who have harsh conditions to deal with – transport and others – I am talking here, with due respect, to where areas that cuts can be exercised, including salary cuts, and change the way we do business in Eskom.
“It is a plea that, as Treasury, we will continue making to Eskom. We will continue with that in discussions with the public enterprises department and Eskom because clearly it cannot be business as usual.”
He said that at the very least labour could assist in drawing up categories for employees and start discussing what can be skimmed off of the top for the big earners. He said the same plea had been made to government departments as well.
“Being hard on ourselves now so that we enjoy later ... this should be what defines us as a nation and what defines the future of how state-owned enterprises are managed.”
Referring to a “grand social bargain”, he said that all stakeholders needed to be involved.
This included business who could play their part by forgoing some of their profits – for example those who supply coal – in order to assist government in rebuilding Eskom “jointly”.