Eskom to pay back R5bn PIC loan, as union vows 'never again'

It’s been an eventful week for the power utility, which managed to secure a R20-billon short term credit facility with a consortium of local and international banks on Wednesday. (Paul Botes/M&G)

It’s been an eventful week for the power utility, which managed to secure a R20-billon short term credit facility with a consortium of local and international banks on Wednesday. (Paul Botes/M&G)

Eskom has confirmed that the R5-billion short term loan it received from the Public Investment Corporation (PIC) will be paid back on Thursday, according to spokesperson Khulu Phasiwe via a WhatsApp message to Fin24.

READ MORE: PIC gives Eskom R5-billion lifeline

It’s been an eventful week for the power utility, which managed to secure a R20-billon short term credit facility with a consortium of local and international banks on Wednesday.

This came a day after Standard & Poor’s Global Ratings downgraded Eskom’s credit rating to ‘CCC+’ from ‘B-’, citing concerns that the Eskom could default on its debt in the next six months.

READ MORE: Eskom signs R20bn credit facility amid ‘unfortunate’ downgrade

When the loan was extended by the PIC in February, the Public Servants Association (PSA) said that it felt “betrayed” by the agreement as this could risk government employee pensions being caught up in flailing state owned companies (SOC’s).

PIC CEO Dan Matjila explained to Parliament that the R5-billion was only bridging finance until the end of the month and would earn above market interest rates for the Government Employee Pension Fund (GEPF), whose assets are managed by the PIC.

The rate which was agreed on was an addition of 75 basis points (quarter of a percent) to the one-month Johannesburg Interbank Agreed Rate (JIBAR) which is currently 6.9%.

Union vows never again

Trade union the Public Service Association (PSA) welcomed the repayment of the loan to the PIC, but said it’s “not the end of it

“It was still paid irregularly… [we] have to make sure that a transaction like this doesn’t happen again”, PSA deputy general manager Tahir Moepa told Fin24 by phone.

Moepa said that their demands for a reconfiguration of the PIC remain in place but they will give newly appointed Finance Minister Nhlanhla Nene a few days to settle into his job before threatening to go ahead with legal action.

The union was prepared to go to court to demand that former finance minister Malusi Gigaba include more labour representatives on the board of Africa’s largest asset manager.

“We hope he will be more receptive to the plight of public servants and the GEPF”, Moepa said.

The PSA, which represents more than 200 000 government employees, is also opposed to newly appointed Deputy Minister of Finance Mondli Gungubele being appointed as chairperson of the PIC’s board, as has been the tradition.

Instead, they want someone who is independent, with a business background, rather than a politician to fill the position.

The Congress of South African Trade Unions (Cosatu) president, S’dumo Dlamini, also welcomed the repayment of the Eskom loan saying that the R1.9-trillion in assets managed by the PIC is “for the workers”.—Fin24

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