Picture: 123RF/PHIVE 015
Picture: 123RF/PHIVE 015

The SA economy is facing its worse crisis since 2008, with the rate of unemployment sitting at 38% and rising. Growth in GDP has barely reached 1% recently, and there are 600,000 new job-seekers annually. The public national debt is sitting at R3-trillion, some of which is denominated in dollars or other foreign currencies. 

The last and only ratings agency that has shown some level of sympathy and tolerance for our economic situation, Moody’s Investors Service, will likely downgrade SA in February if no plan to deal with Eskom and grow the economy is presented. A downgrading will be a devastating blow to workers, the economy and the state, and will make our economic recovery much harder and more prolonged.

Eskom, with a debt of R450bn and rising is the ticking time bomb threatening to collapse the entire economy. The country is fast running out of options because not only are the jobs of 44,000 workers at Eskom at risk but, in fact, those of all 16.7-million SA workers should Eskom collapse.

Failure to deal with this will likely result in an International Monetary Fund (IMF) or World Bank bailout and routine austerity measures that will not just see cuts in public spending but also lead to a huge reduction in all aspects of social and economic benefits to the people, in wages, retirement benefits and pensions, health and education, and social welfare transfers.

Cosatu proposes that the R104bn already committed to Eskom in the form of Eskom bonds be converted into worker equity. This will result in workers becoming shareholders in the power utility

The country is now more vulnerable to the policy dictates of these Western institutions than before, a development that will seriously undermine our national self-determination. Given the potential collapse of Eskom and the devastating impact it would have on workers, union federation Cosatu has expressed its willingness to support key interventions to ensure the survival of the power utility and the economy. 

Cosatu’s proposal is about reducing Eskom’s dangerously high debt to a sustainable level. These interventions and support from Cosatu are conditional on the government and Eskom not retrenching workers and taking the idea of privatisation off the table.

Cosatu has proposed a package to reduce Eskom’s debt from R450bn to R200bn through a special-purpose finance vehicle involving a social compact between the government, the Public Investment Corporation (PIC), the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC). The PIC is already exposed at Eskom to the tune of R95bn, and the Unemployment Insurance Fund (UIF) is holding R9bn of Eskom bonds. Workers, therefore, have a responsibility to safeguard and salvage their investment. 

This proposal is not a blank cheque, or a donation. It is an investment tied to some essential conditions. Cosatu proposes that the R104bn already committed to Eskom in the form of Eskom bonds be converted into worker equity. This will result in workers becoming shareholders in the power utility.

Public-sector workers who are close to retirement will not be negatively affected by the decision to invest in Eskom. This is because the Government Employees Pension Fund (GEPF), the largest investor in the PIC, is a defined-contribution fund. The fund is guaranteed to pay benefits to beneficiaries regardless of any eventuality. 

There must be worker representation on the Eskom board, because workers need to know that if they invest their hard-earned monies in Eskom there will be transparency and accountability. They need to have a voice in how their money is being spent by Eskom. Worker representation will help build trust and enable workers to highlight problems at the highest level for intervention.

Also, as part of building trust and confidence among workers and the public at large, the Political Office-Bearers Pension Fund must be placed under the PIC. Workers hold politicians responsible for the crises facing Eskom and the state. Workers therefore need to know that if they are willing to invest their money in saving Eskom, politicians, too, are willing to play a role and make the sacrifices and risks necessary to save Eskom, the state and the nation.

A comprehensive public audit of all Eskom contracts and expenditure should be instituted, including coal supply contracts. This should lead to all those who have looted the utility getting arrested and their assets seized. The decision-makers who are guilty of mismanaging Eskom must all be dismissed and held personally financially liable.

Coal suppliers and independent power producer (IPP) generation contractors must be forced to reduce their prices, or their contracts should be cancelled, and Eskom’s generation mandate must be expanded by the minister to allow it to expand its own renewable energy generation capacity. The relevant investment in battery storage for renewable energy must begin.

Debt recovery

Workers also demand that a comprehensive debt-recovery plan be implemented to recover the billions owed by departments, state-owned enterprises (SOEs), municipalities, communities (including Soweto), and consumers at large. There must be no exceptions. The National Treasury must simply deduct monies owed to Eskom by departments, SOEs and municipalities from their budget allocations and transfer the funds to Eskom.

A single payment account must be established for all consumers to pay Eskom directly. This will require reviewing the funding model for municipalities that use Eskom collections as a revenue-generating opportunity, irrespective of whether the municipality added value to the electricity distribution, or even paid Eskom itself.

Electricity tariffs must be affordable for all consumers, including industry and for export to neighbouring states. The 400% increase in tariffs in the past decade is not only strangling economic growth but threatening to collapse entire sections of the mining industry. It poses a risk to hundreds of thousands of mining, manufacturing, service and agricultural jobs.

The government and the National Energy Regulator of SA (Nersa) must play a far more active role in ensuring that Eskom’s tariff increases are affordable and supportive of economic growth. They cannot serve as means to cover for mismanagement and corruption.

Electricity payments for all consumers must move to a pre-paid system, in particular large consumers such as government, SOEs, municipalities and industry. A comprehensive maintenance plan that ends load-shedding and is supportive of economic growth has to be developed and speedily implemented.

Cosatu also expects a weekly public report to be made available by the government and Eskom on the these interventions as part of rebuilding trust with the nation

Workers also want to see a proper staff audit conducted to determine whether Eskom is bloated and, if so, where. This must include what services are still being outsourced — and if they should be.

Reskilling and redeployment programmes must then be discussed with labour at Eskom and the Public Service Co-ordinating Bargaining Council, in which surplus staff can be redeployed to other units within Eskom as well as to municipal electricity departments and the broader public service sector. But no worker must be retrenched. The bloated management salaries and management perks must be slashed.

A just and inclusive transition plan needs to be developed and implemented for workers at power stations and coal mines that are reaching the end of their lifespans, and their host communities, in particular in Mpumalanga, Limpopo and the Eastern Cape. The lifespans of existing coal-powered stations should be extended by converting them to gas or other forms of generation, where possible; if this is not possible, alternative economic opportunities must be found.

Cosatu also expects a weekly public report to be made available by the government and Eskom on the these interventions as part of rebuilding trust with the nation. This will ensure full transparency and, most critically, assist in holding  the government, Eskom, industry and all parties accountable for the implementation and success of the turnaround plan.

The economic growth and welfare of the nation needs a working Eskom and electricity that is affordable and reliable. Cosatu has, therefore, a responsibility to act on behalf of its members, and has a mandate to use its influence in a more focused and beneficial way for its members. Its congress mandated the federation to campaign to compel investment that will create employment and improve conditions for working people and the poor.

Cosatu’s position is that all retirement funds, the life assurance industry and the assets of the PIC should be required by law to invest at least 10% of their asset base in government bonds dedicated to social investment and employment creation. There should be a bias towards investments in activities that have high employment multipliers so as to maximise the job creation impact.

The retirement funds, which control billions of rand, mostly benefit the big insurance companies and Cosatu members benefit very little. Workers believe that their retirement funds can contribute towards economic growth, socially desirable investments and employment creation.

Cosatu’s mandate is to protect every worker’s job and pension, to ensure their families have food on the table and a roof over their heads. Investing and saving Eskom will also ensure that the economy can grow and that the state can deliver public services. 

• Ntshalintshali is Cosatu general secretary.