/ 30 January 2020

Cosatu has a plan to save Eskom

Cosatu Suggests An Eskom Solution
(Paul Botes/M&G)

A comprehensive debt recovery plan should be implemented to recover the billions owed to Eskom, says trade union federation Cosatu.

“There must be no exceptions. Treasury must simply deduct monies owed to Eskom by departments, state enterprises and municipalities from their budget allocations and directly transfer it to Eskom,” a Cosatu document says.

Eskom has previously cut electricity supply to some municipalities that are in arrears. A spokesperson said supply to municipalities was not currently being interrupted. 

The state-owned power utility said that, at the end of 2019, municipalities — excluding Soweto — owed Eskom R27-billion. Soweto owed R16.4-billion and government departments R34.4-million.

The Cosatu document, dated January 22, forms part of high-level deliberations by the ruling tripartite alliance ahead of President Cyril Ramaphosa’s State of the Nation address on February 17 and Finance Minister Tito Mboweni’s budget on February 26.

Cosatu’s Key Eskom and Economic Intervention Proposals were presented by the federation to the November and December 2019 Alliance Political Council in November and December 2019 and to the ANC’s national executive committee lekgotla in January, where the proposals “received broad support”, according to Cosatu. 

“Further engagement between Cosatu, the ANC alliance and government at a senior level will take place shortly to seek to find agreements on saving Eskom and growing the economy. It is hoped that these can be in place before the February 2020 budget speech,” the document says.

“Workers are [bearing] and will bear the brunt of the consequences of a collapse of Eskom, the state enterprises, the state and economy. In short we have one month to find a plan,” it warns.

Cosatu says a “pro-worker” Eskom turnaround plan must include a debt restructuring package to reduce Eskom’s debt from R450-billion to R200-billion through a special purpose finance vehicle involving a social compact between government, the Public Investment Corporation and development finance institutions.

It says its approach is based upon a social compact where all parties — from government to labour, business and consumers — make a contribution and, where necessary, a sacrifice for the sake of the national interest. “It is also critical that the state itself is saved so that it can play the progressive developmental role that workers and voters expect from it,” the document states.

Most urgent, it says, is the social compact and turnaround plan for Eskom as well as similar compacts for other state entities such as Transnet, the Road Accident Fund, the Passenger Rail Agency of South Africa (Prasa), SAA, SA Express, SABC and Denel.

The document proposes that surplus workers are moved to other jobs in the state sector. “Reskilling and redeployment programmes must then be engaged upon with labour at Eskom and the Public Sector Bargaining Council where excess staff can be redeployed from units of surplus to units of shortage within Eskom as well as to municipal electricity departments and the broader public service and sector. But no worker must be retrenched.”

Cosatu sees a restructured Eskom to include worker representation on its board. “Workers need to know that if they invest their hard-earned monies in Eskom that it is safe.

“They need to have a voice in how Eskom and their money is being spent. Worker representation will help to build trust and enable workers to highlight problems at the highest level for intervention,” according to the document.

Cosatu says this debt package is not a blank cheque or donation. It is conditional on a comprehensive public audit of all Eskom contracts and expenditure, including coal supply contracts; those who have looted must be arrested and their assets seized; those who mismanaged must be dismissed and held financially liable; and coal suppliers and independent power producers generation contractors must be forced to reduce their prices or their contracts cancelled and assets expropriated.

“Eskom’s generation mandate must be expanded by the minister to allow it to expand its own renewable energy generation capacity and the relevant investment in battery storage for renewable energy must begin,” the document adds.

Eskom must be reined in, Cosatu says: “The 400% increase in tariffs in the past decade is not only strangling any economic growth but in fact threatening to collapse entire sections of the mining industry and a risk to hundreds of thousands of mining, manufacturing, service and agricultural jobs.

“Government and Nersa [the National Energy Regulator of South Africa] 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 bail out mismanagement and corruption.

“Electricity tariffs must be affordable for consumers, industry and for exports to neighbouring states. The free electricity allocation to indigent households should be increased as per the ANC elections manifesto as part of cushioning the poor in a difficult economic climate.

“Electricity payments for all consumers must move to a prepaid basis, in particular for large consumers, for example government, state enterprises, municipalities and industry.”

Cosatu also wants a “proper staff audit must be conducted to determine if and where Eskom is bloated” and for “bloated management and management perks must be slashed”.

The document calls for worker and locally-owned generation capacity to be increased, in particular targeting coal workers and “communities”.

“A Just Transition plan must be developed and implemented for workers at power stations and coal mines reaching the end of their life spans and their host communities, in particular Mpumalanga, Limpopo and the Eastern Cape,” it says, suggesting too that the extension of the life span of coal power stations reaching their end should be extended by converting them to gas where possible.

“Targeted public and private investments must be made to produce renewable energy technology locally and in particular in those for provinces and targeting workers whose jobs are at risk.”

Cosatu puts prosecutions for corruption front and centre of what needs to be done. It says that although some progress has been made to tackle corruption, very few people have actually been arrested — “10% of the budget is still lost on average to corruption and wasteful expenditure … tax revenues are declining”.

“The MTBPS [medium-term budget policy statement] presented no plans to deal with these crises. Moody’s will downgrade South Africa in February if no plans to deal with Eskom and grow the economy are presented,” it says.

“Workers need decisive intervention by the alliance and government to save their jobs and public services. Workers cannot depend upon individual departments, state enterprises or business to act in their interest.” 

Further reading: Cosatu suggests an Eskom solution