Numsa says Cosatu’s plan to save Eskom misses the mark on energy transition

In a seminar organised by Tshisimani Centre on labour responses to end the loadshedding by Eskom, deputy secretary of the National Union of Metal Workers of South Africa, Carl Cloete, criticised the proposal by the Congress of South African Trade Unions to rescue the debt-stricken power utility Eskom.  Cosatu’s Key Eskom and Economic Intervention Proposal argues for state-owned institutions to take over R254-billion of Eskom’s debt. It wants the Public Investment Corporation, Industrial Development Corporation and the Development Bank of Southern Africa to help pay Eskom’s debt.

The labour federation has put on the table a proposal arguing for the PIC to make use of workers’ pension funds to help pay Eskom’s debt. Cosatu says that instead of the money going to corrupt individuals and stock market investments, the bailout of Eskom will safeguard the pension funds and ensure the money goes to an entity the country needs.

“There is too much focus on how to save Eskom and not enough on guiding the finance required for energy transition,” said Cloete. “Although the federation’s package talks about targeted investments in renewable energy technologies, electric vehicle production and investment in battery storage as a way of dealing with the intermittency of renewable energy, there are no proposals on how these initiatives are to be developed and financed. The focus is on Eskom’s debt. Who is financing the worker- and community-owned renewable generation capacity that Cosatu moots?” asked Cloete.

Matthew Parks, Cosatu’s parliamentary coordinator, said that they took the decision based on the belief that if Eskom fails then the whole economy would fail which would open the country up to institutions like the International Monetary Fund and the World Bank. “What we are proposing is a social compact between government, labour, business and communities to invest in and clean up Eskom and allow it and the economy to heal and grow,” said Parks.

Cosatu says a “pro-worker” Eskom turnaround plan must include a debt restructuring package to reduce Eskom’s debt from R454-billion to R200-billion through a special purpose finance vehicle involving a social compact between government, the Public Investment Corporation and development finance institutions.

Cosatu sees a restructured Eskom that includes worker representation on its board. Some of the conditions that have been put forward by the labour federation are that no worker should be retrenched and for Eskom not to be privatised.

However, Sandra van Niekerk from the Alternative Information and Development Centre, said that there is a need to do an audit of the debt at Eskom to avoid using pensioners’ money to pay for illegal debt that others who siphoned money from the power utility should pay. “The Kusile and Medupi loan from the World Bank cannot be paid by the pension fund money,” she said.

According to media reports, the World Bank lent Eskom $3.75-billion of the project cost of $10.7-billion (about R163-billion) for the construction of the Medupi power station. It also provided $250-million for renewable energy support projects, including a battery storage project. Some of the money according to van Niekerk was lost through corruption and the projects are far from completion whilst the World Bank expects to be paid back.

Van Niekerk added that not only must Eskom be transformed but the whole economy must be transformed.