From business rescue to court action: Other unions react to Cosatu's plan to cut Eskom's debt

accreditation
An electricity pylon (iStock).
An electricity pylon (iStock).

As talks continued this week around proposals first put forward by trade union federation Cosatu to cut the debt of power utility Eskom, other labour organisations have reacted by proposing the state-owned entity be placed under business rescue, threatening court action, or saying consultations with members was needed.  

The talks to use finance from public and private institutions to cut Eskom's R450bn of debt by around R250bn gathered pace last week in meetings between government, business and labour held under the auspices of the National Economic Development and Labour Council. Eskom does not make enough from selling electricity at current prices and volumes to pay off the interest on the debt. 

A proposal put forward by Cosatu to create a special purpose finance vehicle using funds sourced from state-run asset manager the Public Investment Corporation and other state institutions to cut debt served as a basis for the talks. Cosatu previously said that government, unions and business had "in essence" accepted that its proposal could serve as a basis for the debt restructuring plans. The PIC did not respond to a request for comment. 

The debt restructuring proposal was one of 27 "interventions" proposed by Cosatu that served as a basis for discussions. Other points included a public audit of all Eskom contracts and expenditure, a reduction in the prices charged by coal and renewable energy providers, worker representation of the utility's board, and a staff audit. 

Business rescue 

Federation of Unions of South Africa (Fedusa) acting general secretary Riefdah Ajam told Fin24 that certain aspects of the proposed deal to restructure Eskom's debt had not yet been clarified during the engagements.

Ajam said the union federation wanted the debt-laden power utility to be subjected to fundamental restructuring and for it to be placed under business rescue.

"We can't accept R250bn debt write-off with no accountability ... Government bonds must be issued to raise money to ease the debt on Eskom," said Ajam.

Ajam said other state-owned entities were languishing under a cloud of uncertainty because of corruption and mismanagement. A possible solution was to also place these organisations under business rescue to restructure their business models.

"We want to see, not throwing money at the problem, but a sustainable turnaround strategy. This includes the facilitation of a 'user pays' system. We won’t hesitate to institute class action because South Africans are being double taxed," Ajam said.

South African Federation of Trade Unions (Saftu) general secretary, Zwelinzima Vavi, told Fin24 that the federation would canvass its membership on how to respond. 

"We have had a discussion on that issue. We have not taken a decision and it is not one that we will take without undergoing consultation. It is a very personal and emotive issue. There was a time when one could say 'yes' to such a proposal easily, but that simply is not the case anymore," said Vavi.

'Fixing mistakes with workers' money' 

Trade union Solidarity, meanwhile, has announced it will hold a press conference on Wednesday morning to announce legal action against plans to use the pensions of workers to bail out Eskom.

"To use workers' money to help ailing state enterprises is to make a mistake to correct a mistake," said Dirk Hermann, Solidarity CEO, in a statement.  

On Wednesday last week Reuters reported that President Cyril Ramaphosa is "favourably disposed" to Cosatu's proposal. The president is expected to give more information about the debt-rescue plan during his upcoming State of the Nation address on Thursday.

Business Unity South Africa's vice president, Martin Kingston, meanwhile, told Fin24 on Friday that while the business body was in principle in agreement with a proposal to mobilise private and public savings to assist Eskom financially, financial organisations should not be exposed to excessive risk in the process.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
17.84
+1.3%
Rand - Pound
20.17
-0.0%
Rand - Euro
17.51
+1.0%
Rand - Aus dollar
11.63
-0.5%
Rand - Yen
0.12
+1.3%
Gold
1,700.00
+2.3%
Silver
20.70
+8.8%
Palladium
2,236.00
+3.2%
Platinum
907.00
+4.9%
Brent-ruolie
85.14
-2.4%
Top 40
57,850
+0.8%
All Share
64,227
+0.8%
Resource 10
61,646
+2.3%
Industrial 25
77,524
+0.2%
Financial 15
13,816
+0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders