Fundamentals of Eskom debt-reduction plan accepted by govt, business - Cosatu

The Congress of South African Trade Unions says government, unions and business have "in essence" accepted a proposal first put forward by the trade union federation to use funds from the Public Investment Corporation and other state institutions to cut Eskom's huge debt burden.

This follows talks held on Thursday.

The Public Investment is South Africa's state-owned asset manager, and invests on behalf of the large Government Employee Pension Fund and four smaller state-run funds, including the Unemployment Insurance Fund. It manages over R2trn in funds in total. Eskom has a debt burden of R450bn and does not make a enough from selling electricity at current prices and volumes to pay off the interest on the debt. 

Details of how the intervention would work are still being thrashed out. In its proposal used as the basis for discussions, the federation suggested a debt package to reduce Eskom’s debt by about R250bn through the creation of a special purpose finance vehicle. In addition to the PIC, it suggested that the the Development Bank of Southern Africa and Industrial Development Corporation be involved. 

"It was a Cosatu proposal and government has accepted. This will assist the economy and position it to create jobs. This will be to the ultimate benefit of workers because without electricity there is no jobs," spokesperson Sizwe Pamla told Fin24 on Friday morning. 

Pamla said it would be favourable for the finances that the PIC managed to play an active role in investment into the economy. He said President Cyril Ramaphosa may announce further details during his State of the Nation Address on February 13. 

Some of the 26 key points that the trade union federation included in its proposal that it used as a basis for discussions were the inclusion of workers on the Eskom board, the establishment of a panel to scrutinise major contracts, no retrenchments and a comprehensive skills audit of the entire Eskom payroll.

- Additional reporting by Jan Cronje 

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