Wage deal to cost Eskom R1 billion as Public Enterprises slams ‘state of emergency’ reports

Eskom says the wage deal it reached with unions will cost the the utility R1 billion.

This comes as the country is experiencing a continuous run of load shedding.

On Tuesday, Eskom signed a new wage agreement with the National Union of Mineworkers (NUM), the National Union of Metalworkers of South Africa (Numsa) and Solidarity, guaranteeing workers a 7% wage increase.

The agreement will apply from 1 July 2022 to 30 June 2023 to all permanent employees at Eskom.

While Eskom said it was pleased to bring the negotiations to an end following unlawful strikes in the past week, the utility indicated that the agreement would add pressure.

“The overall effect of this agreement on the wage bill will be more than R1 billion over the period of the agreement. This of course will be a struggle for Eskom to afford,” the utility said in a statement.

The unions had demanded a 15% wage increase, with Eskom chief executive André de Ruyter arguing that constant yearly increases would lead to electricity prices increasing “way above inflation”.

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This was echoed by energy economy specialist Lungile Mashele, who recently told The Citizen that when Eskom had wage negotiations, a part of an increase requested from the National Energy Regulator of South Africa (Nersa) consisted of a number of things, including overheads of the job.

According to Mashele, if Eskom did not receive the 9.6% increase from Nersa, it would impact on how the utility budgeted and it would not be able to afford certain increases.

She said if the utility sought to meet the salary increases requested, which were “three times above inflation rate”, it would have an impact on the price of electricity.

Mashele added that if Eskom went ahead with salary increases, there was a “high chance” Nersa would not adjudicate in their favour in terms of “annual multi-year crises termination increase”.

“Nersa will argue to pay for such because it was way above what should have been paid.

“Eskom’s tariff applications included the submission of documents to Nersa with labour costs and if it was deemed too high or out of benchmark, Nersa will tell Eskom they will not recover costs, impacting their tariff,” she said.

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‘State of emergency’

The Department of Public Enterprises (DPE) has dismissed claims that ANC was considering a declaration of a state of emergency on Eskom and the energy sector in the country.

Media reports this week suggested that the ANC’s national executive committee (NEC) received a report, which contained details on the state of the energy grid, from Public Enterprises Minister Pravin Gordhan.

But the DPE has criticised these claims, which is said to have come from sources who attended the party’s three-day NEC meeting.

“The media is being fed false stories of the recent ANC NEC meeting and its discussions about Eskom and the current energy situation.

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“Whilst some want to make Eskom a ‘political football’, there are determined efforts to address the current energy challenges and stabilising the grid to ensure the security of electricity supply in the country.

“Accurate information about how the situation at Eskom is being resolved will be communicated through formal government processes and structures and not through spreaders of fake and distorted information who have no national interest at heart,” the department said in a statement on Tuesday.

“The media needs to ensure that it retains its ability to determine the true facts and not to be misled by those seeking to use Eskom and the energy challenges in the country for their own nefarious political objectives,” it added.

Additional reporting by Lunga Simelane