DA to oppose pension money to cut Eskom’s debt of more than R500 billion

Opposition party Democratic Alliance (DA) announced on Saturday it plans to oppose a proposal to use public servants’ pensions to cut Eskom’s debt of more than R500 billion.

DA Shadow Minister Public Enterprises Ghaleb Cachalia said in a statement that even though the holder of Eskom’s debt, Futuregrowth Asset Management, the Public Investment Corporation (PIC) has been approached by the National Treasury to convert about R95 billion of Eskom debt held by the PIC into equity.

Earlier this year Cosatu published a bold proposal to relieve Eskom of close to 60% of its debt using pension money.

The plan would see the PIC, which manages pensions on behalf of the Government Employees Pension Fund (GEPF), the Development Bank of Southern Africa, the Industrial Development Corporation and private lenders take R254 billion off of Eskom’s books.

Public Entreprises Minister Pravin Gordhan said the government had a “total commitment” to act within the provisions of the social compact signed at Nedlac on Tuesday, which is an endorsement of Cosatu’s proposal to use public servants’ pensions to cut Eskom’s debt of more than R500 billion.

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It has been argued that Cosatu’s proposal lacks a “detailed vision on just how funds raised through pensions of public servants will ever be returned with interest or just how the SOEs in question will be returned to profitability”.

Already, national treasury has budgeted R59 billion for Eskom over the current medium-term budget which could be utilised, in part or in whole, to provide the guaranteed return to the PIC.

Cachalia says majority Eskom’s debt about R350 billion is already guaranteed by South Africa’s government and the swap could put Eskom into technical default.

ALSO READ: Cosatu is correct about PIC funds and Eskom

“The Democratic Alliance (DA) will oppose this desperate move which will continue to prevent anyone having a say in how monies are spent – as an approach to the IMF would entail. The reality is that state-owned enterprises have failed and should be sold, allowing the government to reduce its wage bill and foster an environment conducive to investment and job creation,” Cachalia said.

Adding that the party will discuss the issue with global and local experts in the field of an electricity utility and debt management.

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