Cosatu wants private pension money to fund Eskom debt

Cosatu, a key ruling party ally, is pushing senior members of government to consider its proposals to rescue the state’s indebted power utility before next month’s budget.

In addition to suggestions it made in a November document that civil servants’ pensions and a state-run unemployment fund be used to cut Eskom debt by more than half to R200-billion, Cosatu wants the government to consider making it mandatory for private pension funds to invest part of the money they control in infrastructure. It also wants workers to be represented on Eskom’s board.

Cosatu made its proposals at a meeting with senior members of the ANC earlier this month and, according to a document seen by Bloomberg, they “received broad support”.

Union support will be key to reviving Eskom, which isn’t selling enough electricity to cover its operating costs, has amassed more than R450-billion of debt and has way more workers than it says it needs. Cosatu, which opposes any job cuts, is an ally of President Cyril Ramaphosa and plays a central role in helping him retain control over the bitterly divided ANC.

“A discussion must begin between government, the PIC, labour and the retirement industry on a sustainable, correct and progressive balance to be agreed to on prescribed assets in support of key public goods and infrastructure,” Cosatu said.

The PIC is the Public Investment Corp, which oversees state workers’ pensions and Africa’s biggest fund manager. Cosatu, South Africa’s biggest labour group, and the South African Communist Party are in an alliance with the ANC.

Proposals

Proposals made by Cosatu in addition to those it made in November include:

• Eskom should be permitted by government to build its own renewable power plants.
• The utility must begin investing in battery storage for renewable power.
• A debt plan to recover the money owed by municipalities and government departments to Eskom must be implemented by deducting the money owed from their budget allocations.
• Electricity should be paid for in advance.
• Coal-fired power plants approaching decommissioning should be converted to use gas where possible.
• Solar panels should be mandatory for all buildings within five years.

“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,” Cosatu said. “It is hoped that these can be in place before the February 2020 budget speech.”

South Africa’s annual budget will be announced on 26 February.  — Reported by Antony Sguazzin, (c) 2020 Bloomberg LP