The Democratic Alliance says that a proposal by trade federation, the Congress of South African Trade Unions (Cosatu) to use workers’ pension funds to bail out state power utility, Eskom, should be rejected ‘unequivocally’.
Cosatu met with government, business, community and labour leaders on Monday (3 February) to present its plan to rescue debt-stricken Eskom.
The union wants the PIC, the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC) to invest in a special purpose vehicle that would accommodate as much R250 billion rand of Eskom’s R450 billion debt.
The presentation was largely welcomed by the business sector, Bloomberg reported. And Reuters reported that president Cyril Ramaphosa is “favourably disposed” to Cosatu’s proposals, citing his spokeswoman.
Ramaphosa agreed with government’s social partners on Monday that any steps taken on Eskom’s debt should not undermine the investment mandates or fiduciary duties of the PIC or other affected institutions, his spokeswoman Khusela Diko said.
The president said, “there needed to be a broader discussion around how financial institutions invest their money, since a relatively small portion of their funds were being directed to developmental projects,” according to Diko.
Minister of Public Enterprises Pravin Gordhan also reportedly indicated that Cosatu’s proposal has legs for further discussion.
“Trade union federation Cosatu has come up with its own innovation to protect jobs within the Eskom environment,” Gordhan said at a lunch hosted by law firm ENSafrica in Cape Town on Tuesday. “That is 16,000 people.”
The DA was quick to respond to the minister’s remarks. “Minister Pravin Gordhan has confirmed that he supports using pensioners’ savings, managed by the Public Investment Corporation (PIC), to bail out Eskom,” said Geordin Hill Lewis, DA shadow minister of finance.
“This is a deeply irresponsible policy proposal that should be resisted by government employees and pensioners alike.”
“We call on the Government Employees Pension Fund (GEPF), which gives an investment mandate to the PIC on behalf of pensioners, to reject this proposal unequivocally, Hill Lewis said.
Their highest responsibility is to their members, the millions of hard-working South Africans that contribute to that fund every month, he said.
“They have no responsibility to the ANC, and no responsibility for bailing out failed state companies.”
The political party called on the GEPF and PIC to appear before the Standing Committee on Finance in Parliament as soon as possible to make their position clear on this proposal.
The DA said it has also written to the committee chairperson to request such a meeting be called as soon as possible.
“It is easy to use other people’s money to solve his problems. But if Pravin Gordhan is happy to risk the pension savings of millions of government employees to bail out Eskom’s debt, he should start by offering his own pension first,” Hill Lewis said.
“He knows that when Eskom cannot repay the pensioners, it is the public who will have to pay eventually, through crippling higher prices and higher taxes.”
The DA said it has objected to Cosatu’s proposal to use over R250 billion of the money managed by the PIC to finance half of Eskom’s debt.
“Gordhan’s support for this proposal shows that this government really has no idea how to deal with the Eskom crisis, and is now clutching at straws.”