The treasury's relaxation of procurement rules will allow the state utility to attend to its ageing power stations far quicker (Paul Botes/M&G)
The government’s partners at the National Economic Development and Labour Council (Nedlac) have signed a social-compact agreement to turn around the country’s debt-ridden power utility, Eskom.
The social compact was signed at the Nedlac’s 25th annual national summit. The event’s theme was: “Social compacting for economic recovery in the time of Covid-19: pointers to the future”.
In his keynote speech, Deputy President David Mabuza said the compact will focus on identifying and supporting innovative, cost-effective funding mechanisms to reduce Eskom’s debt. At the end of March, the utility’s debt stood at R484-billion.
Nedlac will also look for ways to assist the power utility and the government in accessing fresh capital.
“We are committed to the speedy implementation, especially of necessary structural reforms and long outstanding measures in areas such as energy security,” said Mabuza.
He added that social impact remains relevant and will be an important vehicle through which to hold Eskom to account, to rectify the problems of the past, and to serve the people of South Africa with sustainable supply of electricity going forward.
The negations for this plan began last year. However, in October this year, while announcing the economic reconstruction recovery plan, President Cyril Ramaphosa said that a long-term solution to Eskom’s debt burden will be finalised, building on the social compact on energy security recently agreed to by social partners.
Ramaphosa said the measures aim to achieve sufficient, secure and reliable energy supply within two years.
Minister of Public Enterprises Pravin Gordhan, who signed the social compact on behalf of the government, said that there is still significant resistance to change by former managers of Eskom and some within the power utility.
But he then added that, in the interest of the economic and reconstruction recovery plan, it will be meaningful for the country as a whole to support the plan because it is critical that Eskom’s recovery is sustained.
He said that Eskom is a vital component of the economic recovery plan in terms of energy security. “As we move into 2021, Eskom’s just transition becomes a very important national objective for all of us in relation to meeting climate-change commitments,” Gordhan said, adding that there needs to be a transition from coal to other less damaging forms of energy.
Mabuza also said the government welcomes and embraces the speedy work of its social partners at the Nedlac in delivering a social compact to turn Eskom around, as well as the other measures it agreed on to offer economic relief to citizens.
“More than any other time in recent history, the role and function of Nedlac is an existential necessity, to assist in mobilising confidence and credibility for the economic reconstruction and recovery plan,” Mabuza said.
“We are of the view that if it was not for organised business, labour and community, in their own constituencies and working collectively at Nedlac, we would have been worse off in our response to the pandemic and nationwide lockdown.”
The deputy president lauded measures such as the Covid-19 temporary employer-employee relief scheme, tax payment holidays, the introduction of social grants and the creation of the Solidarity Fund, which were brought to fruition after the negotiations the government had with its social partners.
Mabuza said he was pleased that there has been more agreement and speedy collaboration than ever before at Nedlac on issues such as health and safety in the workplace, measures to make transport safer, and the promotion of locally produced personal protective equipment.
He added that the government must work to eradicate inequality, which he said “undermines human rights for women and young people who remain largely excluded from the economic mainstream”.
The fault lines of inequality not only encourage an absence of shared social cohesion, but also contribute to the delegitimisation of both the public and private sectors, Mabuza said.
He added that South Africa cannot move forward and advance on its nation-building plans and social cohesion without removing the barriers to entry for small businesses, and without integrating women and young people in activities that significantly improve the elemental conditions of their lives.
Mabuza said that attending to the land question is justifiably important for meaningful nation building and for unlocking untapped agricultural and industrial economic potential for the country’s development. His comments come after the government declared that it will give citizens 700 000 hectares of land through lease agreements. The implementation of this commitment is still ongoing.
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“In our view, [the] failure to address the land question is unsustainable, and the prevailing condition provides a fertile ground for social discord and political instability,” Mabuza said.
He said that in finalising the land reform programme, the government will also look to Nedlac as a demonstrable platform for consultation, participation and social compacting, so that it can once again play a key role in taking that process to its logical conclusion.