As an expert warns investors to be on the lookout due to increasing concerns over government and Eskom finances, the Congress of South African Trade Unions (Cosatu) and its mining sector affiliate, National Union of Mineworkers (NUM) are backing the government’s additional R59 billion funding to power utility Eskom.
The ANC-aligned labour federation and NUM argued their support was based on their belief that the intervention would prevent job losses at Eskom and save SA from being deprived of electricity.
But an expert said Eskom is the largest threat to the stability of the economy.
Michael Kruger, investment analyst at Morningstar Investment Management SA, said Eskom was not sustainable in its current form.
Kruger cited World Bank statistics showing a potential overstaffing of 66% of the approximately 49,000 workforce.
Both Cosatu and NUM said they strongly supported and welcomed the additional funding because it would ensure Eskom’s continued functioning for the 2019-20 financial year.
The two yesterday presented their submissions to parliament’s standing committee on appropriations on the Eskom Special Appropriation Bill.
Finance Minister Tito Mboweni allocated R59 billion over three years, of which R26 billion was for the 2019-20 financial year and R33 billion for the 2020-21 financial year, all aimed at keeping Eskom alive.
Earlier, the utility was allocated R69 billion over the next three years towards the restructuring into three entities for generation, distribution and transmission.
“Eskom is too big to fail. Not only are the jobs of about 40,000 workers employed at Eskom at risk, the fact that more than 90% of the nation’s electricity is generated by Eskom means the entire economy need Eskom to survive,” said Cosatu parliamentary coordinator, Matthew Parks.
Parks said their backing of the Eskom special appropriation was on condition that government honoured a promise that no workers would be retrenched at Eskom and the utility wouldn’t be privatised.
Although the government is keen on the unbundling of Eskom into three entities, the unions were of the view that this is privatisation in disguise.
But Parks maintained that Ramaphosa’s commitment to avoid retrenchments and privatisation contrasted Treasury’s economic strategy document released by Mboweni recently. His draft discussion paper recklessly called for Eskom’s de facto privatisation.
“The federation and NUM are alarmed that to date no turnaround plan has been presented by government to save Eskom.
“We are running out of time and bailouts are not enough and are not sustainable. A clear plan is needed as a matter of urgency,” Parks said.
The federation suggested that the plan should include a comprehensive forensic audits of all Eskom expenditure to get to the bottom of looting at the utility, the return to Eskom of all “stolen funds” and the arrests and prosecution of the culprits.
Kruger doubted whether Eskom could reduce its headcount given the 29% unemployment rate and the fact that job cuts were opposed by the labour unions.