Here’s the rider in the plan Ramaphosa will have to explain to the nation if he pushes it through: no Eskom employee may be retrenched. Eskom has 46 000 employees and an annual salary bill of R30bn, writes Adriaan Basson
President Cyril Ramaphosa is according to informed sources about to target the pensions of working and retired teachers, nurses, police officers and all other civil servants to bail out Eskom.
This is unfortunately not an April Fool’s joke, but a real prospect to appease Cosatu and the trade unions – who supported his ascendency at Nasrec – to the detriment of those unions’ own members.
If Ramaphosa is seriously considering this crazy proposal, he must be stopped before Thursday’s State of the Nation Address. If not, he will be stopped by the courts.
Here’s the story in short: Eskom has debt of over R450bn (yes, that is billion rand, not million). That is the value of about 1 830 Nkandlas.
The struggling electricity utility can only service debt of R200bn. So, it needs a friend to take over the other R250bn and pay back the banks and other financial institutions that have lent it money to survive over the years.
No bank or financial institution has the appetite to do this (for obvious reasons) and Ramaphosa, who has championed the turnaround of Eskom as his term’s success story, has set his sights on the Government Employees Pension Fund (GEPF), courtesy of Cosatu.
The GEPF is the pension fund all civil servants belong to. It has assets of over R1.8 trillion and is entrusted with the massive responsibility of safeguarding and investing these funds in the best interest of those who gave their working lives to serve South Africa.
The Public Investment Corporation (PIC) manages the GEPF’s funds. The PIC was one of the state institutions targeted during the state capture years of former president Jacob Zuma.
A report by retired judge Lex Mpati into the PIC’s dealings has been handed to Ramaphosa and is due to be released any day. It will not be pretty.
And excuse the pensioners if they aren’t thrilled by the thought of the GEPF and PIC making dramatic decisions about their future: just last week, we reported how the PIC had purchased an empty farm in Klerksdorp for R590m at probably the highest per hectare rate ever recorded in the North West (if not South Africa).
Something is rotten in the state of Denmark (and Klerksdorp). Watch this space.
But back to Ramaphosa’s latest tryst with Cosatu.
I am not without empathy for Ramaphosa, Eskom CEO André de Ruyter and Public Enterprises Minister Pravin Gordhan in their quest to sort out Eskom. All of us, the pensioners included, need Eskom to work for South Africa to have a future.
But I do take issue with their opportunistic flirting with a plan that can only be to the detriment of the thousands of pensioners whose livelihood depends on the GEPF.
I have tried and tried to see the value for the GEPF in taking over R250bn of Eskom’s debt, but have failed to figure it out. There is simply nothing in it for the pensioners. I was glad to see that Busi Mavuso, the fierce CEO of Business Leadership SA, agrees with me.
"Forcing overseers of people’s pensions to place their funds into indebted and poorly managed SEOs is to risk throwing good money after bad," she wrote in a scathing criticism of the plan in the Sunday Times.
Mavuso sits on the Eskom board and will be a voice of reason in the room.
Here’s the rider in the plan Ramaphosa will have to explain to the nation if he pushes through: no Eskom employee may be retrenched.
Eskom has 46 000 employees and an annual salary bill of R30bn.
Mavuso quotes research that Eskom’s unionised workers are overpaid by 20%. Can it be more obvious where the starting point for cost cuts at Eskom should be?
I guess it is easier to go after the money of old, retired pensioners than to reduce a bloated workforce that has been crippling Eskom for years.
This is a cynical proposal that should not be supported by a president who claims to have compassion and business sense.
- Basson is editor-in-chief of News24