PIC boss weighs in on plan to use pensions to bail out Eskom

The Public Investment Corporation (PIC) says it has not been briefed about a plan to use its money to take over at least R250 billion of Eskom debt.

In a written reply to a DA query, PIC acting chief executive, Vuyani Hako, said that the first he heard of the plan was through media reports.

He added that the PIC has not been made privy to any Cosatu document which proposes this plan, or had any external discussions with the trade federation.

While Hako did not dismiss the idea of using PIC funds to fund Eskom, he cautioned that the investment would have to consistent with its mandate towards clients.

“The PIC is a longstanding holder of Eskom bonds, as provided for by the investment mandate of the PIC’s clients. Eskom has to date honoured all its obligations whenever either interest or principal debts became due,” said Hako.

“Investment decisions by the PIC must be consistent with the mandates of its clients. These mandates are drafted taking into account asset and liability studies and are approved by the Financial Sector Conduct Authority.

“Any approach to the PIC about the possibility of investing in, or swapping investment instruments, must take into account the prescripts of these investment mandates,” he said.

“It must be supported by a credible business case and it must be geared towards delivering sustainable returns for the PIC’s clients.”

Cosatu met with government, business, community and labour leaders on Monday (3 February) to present its plan to rescue debt-stricken Eskom.

Key to this plan is the use of civil servant pensions and a state-run unemployment fund to cut Eskom’s debt by about R254 billion, which would then leave the power utility with a sum of around R200 billion to service, which Eskom has previously said it can manage as it currently struggles to cover its daily running costs.

While Cosatu supported the idea of using the PIC to help address Eskom’s debt issues, it warned that it would be reckless to allow workers money to be invested without first implementing drastic changes at the power utility.

“Currently, worker retirement savings are captive to unscrupulous assets managers, who would rather deploy large chunks of retirement savings in betting on market movements of some stocks, bonds or currencies (including against the rand),” Cosatu said in a statement.

Read: South African pensions to bail out Eskom – ministers should offer their own first says DA

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PIC boss weighs in on plan to use pensions to bail out Eskom