PIC would invest only in ‘credible’ business case for Eskom

The Public Investment Corporation (PIC) says it has not yet been privy to any detailed document proposing the recovery, restructuring or refinancing of Eskom's existing debt, but says it would only invest in a credible business case that has returns for its clients.

SA's broke power utility is R450bn in debt and is seen by ratings agencies as the biggest risk to SA's finances.

Trade union federation Cosatu has proposed a plan to use R250bn of pension money managed by the PIC to pay down Eskom’s debt in return for a range of undertakings by the government, which has been received favourably by President Cyril Ramaphosa, Business Day reported on Wednesday.

Cosatu has suggested that about 7% of the R2.2-trillion managed by the PIC, together with contributions from the Industrial Development Corporation and Development Bank of Southern Africa, be invested in a special-purpose vehicle that would take over R250bn of Eskom’s debt.

Deon Botha, head of corporate affairs at the PIC, said on Wednesday that the corporation had seen the statement issued by Cosatu titled “Key Eskom and economic intervention proposals”, in which it makes the proposal, which would involve a social compact between the government, the PIC and development finance institutions.

“However, the PIC is not privy to the any detailed document that proposes a recovery, restructuring or refinancing of Eskom’s existing debt,” Botha said.

He added that it was necessary to state that the PIC was a long-standing holder of the majority of Eskom bonds, as provided for by the investment mandates of the PIC’s clients.

“Any approach to the PIC about the possibility of investing in any instrument or company must take into account the prescripts of these investment mandates; it must be supported by a credible business case; and it must be geared towards delivering sustainable returns for the PIC’s clients,” Botha said.

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