NUMSA press conference statement on Eskom
21 February 2019
The National Union of Metalworkers of South Africa (NUMSA) condemns in the strongest terms the decision taken by the ANC government to unbundle Eskom, which we reject with the contempt it deserves. From the moment the current “New Dawn” ANC leadership led by President Cyril Ramaphosa took power, we knew that the working class was going to be faced with right-wing, neo-liberal capitalist agendas, and as such, as NUMSA we rejected his presidency.
Indeed the working class has not been spared. Neo-liberal policies that are attacking the hard won gains of workers and the working class in general are being implemented. We as a country are victims of austerity measures enforced by the ANC led by Cyril Ramaphosa; a government which has imposed a slavery national minimum wage of R20,00 an hour, something not even PW Botha dared to do.
This kind of attack being executed by a “democratic” government is such a huge setback. It has become clear that we are reverting back to a familiar, backward belief that the South African racist capitalist economy can only thrive through the super-exploitation of Black and African labour. If this was not enough, the very same Cyril Ramaphosa has been championing a process to tamper with the constitutional right of workers to strike.
NUMSA has consistently warned workers and the working class of South Africa in general that the ANC has chosen the Western capitalist path of development, which is both dangerous and disastrous for our country. We told anybody who cared to know that what used to be called the National Democratic Revolution was off track, a truth that led to NUMSA’s expulsion from COSATU in 2014.
THE ENTIRE ANC LEADERSHIP IS TO BLAME FOR ESKOMS COLLAPSE!
NUMSA has noticed a very cheap ploy being propagated by the ANC where the current leadership in its response to the deep seated rot of corruption within the ANC and its government, present themselves as being holier than thou, targeting the failures of particular individuals who become the scapegoats for a much deeper rot. NUMSA reject this ruse with the contempt it deserves.
PRAVIN GORDHAN AND RAMAPHOSA ARE COMPLICIT IN STATE CAPTURE
The entire ANC leadership led by Cyril Ramaphosa are directly and collectively responsible for the mess of corruption and rot that is ravaging our country. They chose capitalism, which is a system of greed that is inherently corrupt, breeding all social ills, rejected Socialism, which advances humanity. It is the ANC’s capitalist, right-wing policies that have plunged our country, culminating in a very deep economic recession last year.
This leadership of the ANC led by President Cyril Ramaphosa has no revolutionary agenda to transform the structure of South African economy in the best interests of our people. In fact, their agenda is to privatise all our SOEs, and their primary target is Eskom.
Ramaphosa, during SONA, announced that Eskom will be broken up into three parts: Generation, Transmission and Distribution. He also confirmed that “non-core assets” of the SOE would be sold. This is, no matter how consistently the ANC denies it, is the privatisation of Eskom.
This week, the Minister of Public Enterprises, Pravin Gordhan confirmed the ANC’s “turnaround strategy” to unbundle Eskom, which he argues is to provide transparency and an end to corruption. The ANC has also announced through its Finance Minister, Tito Mboweni, its resolve to privatise Eskom, in his 2019 budget speech. To confirm that this is going to happen he has firmly announced that government is not going to take over Eskom debt and that the condition for any financial assistance from the state is reorganisation/restructuring of Eskom.
The definition of unbundling is to “split (a company or conglomerate) into its constituent businesses, especially prior to selling them off”. Unbundling, anywhere else in the world, has been a launching pad for privatisation.
This unbundling, the effects of it are far more detrimental than what is anticipated. The effects include retrenchments, closure of businesses, creation of ghost towns especially in Mpumalanga and tariff hikes far higher than what one can afford on the Poverty National Minimum Wage of R20 per hour.
This is why NUMSA rejects the so called unbundling of Eskom. They have disguised their intentions for obvious reasons. Any sober person with a vision for this country knows that Eskom, which is our state asset and energy supply, must continue to be in the hands of the state and the hands of our people. Our SOE cannot be given to private individuals to make money out of this key national asset, because as a country we need a sustainable and affordable electricity tariff in order to champion manufacturing and industrialisation, and above all, to electrify our communities.
We already know that this is a well-orchestrated agenda, and not one that responds to today’s crisis, but a chosen path set in motion some time ago. This is a self-generated crisis and a premeditated strategy to force the people of South Africa into believing that there is no other option but to break apart and privatise Eskom to secure future energy supply. In the wake of the state’s capitalist agenda, South Africa’s economies, both formal and informal, are collapsing.
The painful irony is that the very leadership who present themselves as fighting hard to undo the crisis faced in Eskom caused by corruption are those who are responsible for the open looting of our SOE. NUMSA rejects Pravin Gordhan’s assertion that ENEL will be resolving the load shedding crisis when we know that ENEL is a beneficiary of the IPP project.
ESKOM – A SELF GENERATED CRISIS
NUMSA has always maintained that there are four holes that are sinking Eskom and this so-called “unbundling” offers no solution to the Eskom crisis, and does nothing to close the holes, as the truth is, this is a self-generated crisis.
NUMSA has consistently stated the main causes of the crisis, namely:
1) IPPs,
2) Inflated Coal Costs,
3) A bloated top executive structure and
4) Tender corruption and Cost overruns at Medupi and Kusile power stations, to which the Eskom Board, Minister of Public Enterprises and Minister of Energy are yet to provide a response.
5) The ANC governments long held view and desire to privatise Eskom, leading to poor investment in maintenance, expansion and innovation.
6) The negotiated capitalist transition guaranteed that post 1994 South Africa would be a corruption ridden society in the state, economy and society: capitalism is corruption.
Against not accepting this background of issues, they instead decided to unbundle Eskom which is in a liquidity crisis. Their fake cover for privatising Eskom through unbundling Eskom is that there will be transparency on the finances of the 3 divisions i.e. Distribution, Generation and Transmission.
The second equally false argument is that unbundling will stop Eskom from being a monopoly. NUMSA’s correct scientific view is that there is no need to unbundle Eskom to know the cost-implication of the different operations. The current cost centres of Eskom reflect the conditions of NERSA’s three licenses, transmission, generation and distribution. Therefore, unbundling does not resolve the current crisis of Eskom that is losing its market sales.
THE DA AND THE ANC ARE WORKING TOGETHER TO DESTROY ESKOM THROUGH THE ISMO BILL!
NUMSA is very clear that the real agenda behind this unbundling and its real mission is to steal from the people – the heartbeat of Eskom which is the Independent System Market Operator through the passing of the ISMO Bill. NUMSA is very clear that this ISMO bill is notorious and NUMSA will do everything it takes to challenge its legality because it is about taking away Eskom Transmission Operations, the entire national grid, Eskom’s control centre and the system operator and generation assets (hydro stations including Peaking plants which are necessary for grid stability) under the ownership of ISMO.
This is a cheap tactic to veto and undermine NERSA’s discretionary role to regulate energy. The whole agenda, championed by President Cyril Ramaphosa, is to take away all checks and balances on energy and hand over power to government and grant the Minister of Energy unfettered powers. The results are very simple: it will be to fast-track the privatisation, and therefore destruction, of Eskom and promote the penetration of the privately owned renewables (IPP’s) into our national grid. This will finally destroy Eskom.
NUMSA calls on all progressive communities and all progressive political parties to oppose the new alliance of the DA and the ANC that will vote for the passing of the ISMO Bill. If it succeeds, Eskom, as an institution will be hollowed out and through this ISMO Bill government will be in a position to fast-track the privatisation of energy in our country and destroy the capacity and role of the state on energy.
THE ANC IS LYING WHEN IT CLAIMS THAT ESKOM IS NOT BEING PRIVATIZED
The other lie which must be exposed is the argument that government is not privatising Eskom. What the ANC of Cyril Ramaphosa is busy with is wholesale privatisation which we reject. We also demand that the current Ministerial determination on gas be scrapped and Eskom be given at least 70% of gas generation. This function has also been handed over to the IPP’s.
Their strategy to privatise is anchored on the first lie that Eskom power stations have reached the end of their lifespan when, in fact, such a decision, is consciously taken by them. As they take a decision to decommission a power station, they replace such a power station with IPPs which are owned by the private sector. As we speak, between 8 and 10 coal power stations are targeted for decommissioning. We know of 12 generating units which have been decommissioned between Komati, Hendrina, Grootvlei and Camden. This is nothing less than the privatisation of our energy.
This wholesale privatisation is even worse than the stated intention in the 1998 White Paper on Energy to privatise Eskom. It’s mission was to crowd in the private sector by allocating 30% of future generating capacity to the private sector with Eskom retaining 70% of the future build. When such an intention was announced, as the labour movement in this country, we were prepared to take to the streets. What the ANC of Cyril Ramaphosa has done is to declare war against the working class.
NUMSA IS CALLING FOR A TOTAL NATIONAL SHUTDOWN TO DEFEND ESKOM
The NUMSA NEC has decided to embark on a rolling mass action through a declaration of Section 77 in defence of Eskom. We shall be calling for unity of all workers across various sectors of the economy. NUMSA, NUM, SAFTU and Cosatu must all take to the streets.
The current liquidity crisis confronting Eskom is self-generated by the current government as demonstrated by the following:
1. Government went ahead and signed the IPPs despite the fact that it had enough capacity when the actual demand in the economy was on a decline. They did this without NERSA calling for public hearings. This was the case in 2011, 2012, 2015, 2018 i.e. Bid 1, 2,3 and 4.
2. It is important to remind everybody about the role of NERSA that it is governed by the National Energy Regulator Act which says that every decision it takes must be consistent with the constitution and be in the public interest. When NERSA allowed Eskom to sign the IPPs without calling public hearings, they acted recklessly and both the Eskom board and Minister of Energy as well as Phakamani Hadebe acted against the Constitution of the country which they swore to uphold.
3. The early warnings of such a reckless decision were very evident and glaring as far back as 2015. Of the R8.2 billion generated in revenue through NERSA tariff increases, R6.5 billion went to the IPPs. Such a decision militated against the interest of Eskom and as such Eskom’s equity was eroded and its profits were depleted.
4. It’s only an idiot who cannot see that the biggest beneficiaries of the IPPs are the banks and the owners of the IPP’s as they have earned whopping profits at the back of an extravagant tariff structure with a lavish return of 17% on equity on Bids Window 1 and 2.
5. The other lie that is often made by the defenders of the IPPs is that we should not make an issue about the renewable program, because its costs constitute a ‘pass through’ cost. They conveniently forget that all of Eskoms costs are passed through and are carried and paid for by the consumer. Furthermore, 60% of South Africans earn less than R4200 per month and as a result, the costly IPPs constitute an attack on the majority of South Africans who cannot afford electricity due to the high tariffs. It is a ‘pass through’ which is punishing consumers. The costly IPPs are destroying, the economy, formal and informal jobs because of an unaffordable tariff. The very same public are paying for the IPPs that are destroying their wellbeing.
6. This unbundling of Eskom is about privatising Eskom which does not address its key fundamental challenges such as increasing interest payments, borrowing levels that are excessive, the operating costs (IPPs and coal costs) and sales volumes which are declining. These are subsequently having a disastrous effect on the cash flow from operating activities.
THE MINISTER OF ENERGY IS CONFLICTED BECAUSE HIS FAMILY BENEFITS FROM THE COSTLY IPP’s
Whilst NUMSA respects and notes the Press Conference which was called by Patrice Motsepe, the Chairman of African Rainbow Energy and Power (AREP), to deal with what is perceived to be a conflict of interest in the IPPs’ space, a simple search will show that the Bid Window 4 which was signed by his brother in-law and Energy Minister, Jeff Radebe within 7 days of his appointment, is to the benefit of AREP which is linked to the Kangas and Perdekraal projects which are part of the 27 IPPs as listed on the AREP website which is owned by Patrice Motsepe. This is why NUMSA welcomes Motsepe’s decision to explain the position that they are not conflicted and that the IPPs in their possession are not from the state but from the private sector. NUMSA’s gripe, over and above the IPPs being bad news for Eskom and the consumer, is that there was no fair procurement process to award these IPP’s. Jeff Radebe, as the Minister of Energy is clearly conflicted given his proximity to the President and Motsepe. One wonders why the President is insistent on keeping him – or was this a conscious deployment?
NUMSA DEMANDS AN INDEPENDENT INVESTIGATION INTO THE IPP PROCUREMENT PROCESS
NUMSA is demanding that in the interest of the South African public, and in the interest of fairness for those who are conflicted or not conflicted, government must agree on the appointment of an Independent Commission in consultation with all stakeholders i.e. labour, government, business and Civil Society, to investigate the procurement process involved in the IPP’s. They must further announce to the South African public the men and women who are the owners and beneficiaries of the IPPs.
We want to emphasise that the question of unbundling is nothing but a strategy to mislead the nation. For instance, it is a lie that we can be convinced that Eskom which is owned and controlled by the public – can be defined as a monopoly. Secondly, the justification that if you unbundle Eskom, you will have financial transparency makes no sense because NERSA has access to the cost of the Transmission, Generation and Distribution. Thirdly, this unbundling is nothing but privatisation which does not deal with the immediate challenges of liquidity.
NUMSA WILL RESUME THE BATTLE OVER IPP’s IN COURT
In 2018 NUMSA teamed up with the Coal Transporters Forum to oppose the reckless signing of Bid Window 4 and we have taken a decision to continue to take up this fight with them. We are approaching the court on the 18th and 19th March 2019. NUMSA is also aware that those who have resolved to privatise Eskom through the scheme of unbundling will stop at nothing. Even if we secure victory against Jeff Radebe’s reckless and scandalous decision to unbundle Eskom, such an outcome will lead to the funders of Eskom withdrawing their funds resulting in Eskom being handed over to BRPs (Business Rescue Practitioners). This will render Eskom insolvent thereby legitimising the selling of Eskom assets to the highest bidder.
THE APPOINTMENT OF ENEL IS ANOTHER STATE CAPTURE IN PROGRESS
Last week Public Enterprises minister Pravin Gordhan appointed Italian renewable energy firm, Enel Green Power, to investigate the problem of Loadshedding (or rolling blackouts) at Eskom. It is our firm view that the appointment of Enel, is not to fix load-shedding but to conduct an assessment in order to evaluate the worth of the assets
with the aim of selling them. If the genuine intention was to fix loadshedding/generation capacity, they would not be importing skills because already the engineers in Eskom are experts and have this capacity. This has been proven with the previous load-shedding where Brian Molefe successfully utilised the +/- 3000 Engineers who contributed to Eskom being named the number 1 Power Utility in 2001.
The fact that the Minister sees nothing wrong with announcing Enel – which is a competitor to Eskom and owns 27 IPPs – explains the bias of government towards the costly IPP’s. This seems to be a systematic trend from the President who appointed a fake task team and apparently could not see the conflict of interest by appointing Brian Dames, who the CEO of Patrice Motsepe’s Arep, (Dames subsequently resigned because of the conflict of interest), and the appointment of the General Manager of Actom, Sy Gourrah. This task team was constituted by soldiers of fortune for IPP’s and Eskom suppliers i.e. Actom (Boiler Serve Contract Supplier) and Anglo (Coal Supplier, Dr. Mthimunye),
The like of Dr. Groove Steyn and Anton Eberhard have made numerous submissions to NERSA calling for the closure of coal power stations which have not even reached their life span. This is why we are not surprised at their recommendation to unbundle Eskom. Anton Eberhard has been at the forefront of the implementation of IPP’s across the African continent e.g. in Namibia and is a former member of NERSA.
THE ANC GOVERNEMENT DELIBERATELY APPOINTED TECHNICALLY INCOMPETENT PEOPLE TO RUN ESKOM
As a manufacturing union we are resolute that the future of this country hinges upon Eskom providing affordable electricity tariffs to champion manufacturing. Instead of the ANC government appointing technically competent Executives and the Board, they given us clueless, retired individuals such as Jan Oberholzer and others. The state has failed to appoint competent people into key positions thus leading to the collapse of the institution called Eskom. NUMSA has identified a comedy of errors with the following appointments:
Andrew Etzinger, (Group Executive for Generation) – zero Generation Operation experience
Jan Oberholzer (Chief Operating Officer) – zero Generation Operation experience
Phakamani Hadebe (Chief Executive Officer) – zero Energy Sector experience
Jabu Mabuza (Chairman of the Board) - zero Energy Sector experience
Eskom Board of Directors – only 2 out of 8 board members with Power Utility experience
Sustainability Task Team – skewed IPP-biased and advocates of failed unbundling ideas
- Inter-Ministerial Task Team led by the Deputy President who is clueless about energy. This task team consists of the Ministers of Police and Intelligence – these are similar events to what happened in Marikana.
The entire Eskom Board has no Generation experience and the big question is when the board meets with the Minister, what exactly do they talk about?
WHAT IS TO BE DONE
1. Primary Coal Cost:
There is a trend from both government and Eskom to plunge the country into load-shedding and blackouts to justify an accumulation strategy to benefit individuals and White Monopoly Capital out of Eskom, whilst at the same time, there is absolutely no agenda to grow Eskom’s sales as a successful business. For instance, we are very clear that the load-shedding in December was self-generated to create a crisis so that the consequences of that crisis can be used to extend the contracts of Cost+ Mines and justify unbundling.
Between 2008 and 2015 they have been receiving increases out of a captive market and Eskom Executives allowed them to receive a 17% increase year-on-year when inflation was hovering around 74%. This is one hole which is sinking Eskom. The recent load-shedding which made President Cyril Ramaphosa to appear shocked and angry, interestingly follows the day after the President announced the unceremonious, unilateral, unbundling of Eskom without any consultation. What is curious about the President’s anger is that he uses this “untimely load-shedding” to justify how important it is that Eskom be unbundled. It is NUMSA’s honest view that both the load shedding in December which led to the renewal of the excessive contracts for Cost+ Mines as well as the recent, faked load shedding were to justify the unbundling of Eskom which is the privatisation of Eskom. It reminds us of Noam Chomsky who said the following about Privatisation:
“That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.”
NUMSA is challenging a lie that has been deliberately peddled by those who want to reap huge profits from IPP’s and the privatisation of energy in South Africa that the 8-10 power stations targeted for closure, are as a result of them having reached their end of life. The challenge that confronts us today is that we do not have an Eskom board – we have a board for IPPs whose decisions have consistently been against the interest of Eskom and consistently promotes IPPs.
Furthermore, their mission is to privatise Eskom, that’s why NUMSA is calling on all South Africans and progressive communities to take a stand and defend Eskom. The SOE is a strategic asset which is at the centre of transforming the Minerals, Energy and Finance Complex which is the South African economy as we know it. The ANC government has failed to transform this crucial sector. We need Eskom in the hands of the state to focus on offering an affordable tariff and not on profits. Our SOE must serve the South African people to deliver sustainably, cheap electricity into the South African economy to drive manufacturing and industrialisation to big, small and medium sized companies and create quality jobs that pay a living wage. And more importantly, to deliver affordable power to the homes of the working class, who are the majority of the people of South Africa.
NUMSA is not mincing its words – we know for a fact that the closure of these power stations is going to lead to massive job losses. Studies done by the CSIR pointed out that the connection of the IPPs and the closure of power stations will wipe out no less than 100 000 jobs in terms of forwards and backwards linkages in the economy with Mpumalanga having the worst shedding of jobs.
2. IPPS
Firstly, the IPPs that were connected in 2016, were connected when we had enough capacity to generate a unit of electricity for 42 cents per kilowatt hour. The connection of IPPs cost Eskom an average of R2.22 per kilowatt hour against the “must buy first” principle from the IPPs, forcing Eskom to sell at a loss of 83 cents. Over the 20-year period, the IPP agreements will cost Eskom more than R1.2 Trillion in nominal Rands (present value) which is more than the nuclear deal.
Jeff Radebe, within 7 days of his appointment, unilaterally, against the will of workers and the country went ahead and signed on another 27 IPP contracts in April 2018 which cost R2.22 per kilowatt hour when Eskom can produce a unit under 50 cents, and therefore, Eskom is selling at a loss of 85 cents.
For the 2017 financial year, the IPP’s expense was R21 billion. All bid windows 1 to 4 and the connection of IPP’s means that Eskom’s loss will grow to R100 billion by 2022 according to its own calculations.
We note the intention by government to renegotiate bid windows 1, 2 and 3. Our demand is simple: the IPPs signed in April 2018 must be cancelled and if IPPs really are a means to offer South Africa a sustainable and competitive electricity tariff, those who signed them into the national grid would offer full disclosure of all possible options for an energy mix, and in what way IPPs are the better choice in the best interest of the people of South Africa. If IPPs really are our best and only option, why would Eskom not own and control those IPPs to ensure that our energy supply remains in the hands of the state as opposed to being at the mercy of private interest?
This begs the question that if Eskom is defined as the electricity supplier of choice by the Department of Energy why does Jeff Radebe not see the need for Eskom to play a role in the IPP space? What is also shocking is that he simply went ahead and signed IPP’s and the argument that is being made is that these IPPs were already approved in 2015. It is not uncommon for government to reconsider a decision if it is not in the interest of the public, and this is an issue which must be urgently reconsidered because it is clearly not in the best interests of the public at large.
Jeff still went ahead and concluded the IPP’s even though there was no demand and secondly Jacob Zuma, among the other things he was attacked for, was his intention to sign a nuclear deal with the Russians which was going to cost the country R1 Trillion. The argument used against him was that the IRP had not been reviewed but Jeff Radebe was not held to the same standards. Even former Eskom CEO Matshela Koko refused to sign the IPP’s as the then CEO as he believed that it would be reckless and detrimental to Eskom.
What is worse is that at the time of the IPPs being signed, Eskom had a reserve margin of 23% which was 6% more than the required 17% in terms of running the national grid. The 23% excludes imports and IPPs.
If one looks at the NERSA figures, they were way higher than the above figures. For instance, this what NERSA said about Eskom when they awarded Eskom tariff increases for 2018/19:
“Operating with a reserve margin in excess of 35% (when considering only Eskom supply) means that Eskom has a large excess capacity. This is more than double the required reserve margin. A reserve margin of 13% is estimated by the European Network of Systems Operators for Electricity (ENTSO-E)”.
To demonstrate the desperation of Honourable Jeff Radebe and his ignorance of the separation of powers between NERSA – which is our country’s only institution with absolute discretion to regulate energy – he had the guts to tell the South African public an extremely conflicting statement which is so contradictory in terms of the role of NERSA. We have quoted him below in his excitement of signing the 27 IPPs in 2018. This is what he said:
“The energy regulator, Nersa has committed to working with the new leadership of Eskom to address the challenges facing Eskom and to ensure that this state-owned company becomes sustainable for the benefit of South Africa, its people and the economy. Concrete steps will be taken during the consideration by Nersa of Eskom’s new MYPD 4 tariff application which will include further allowances for the additional cost that will arise out of the Renewable Energy IPPs that are being signed today”
This deal announced by Jeff Radebe is contrary to the role and regulatory principles of NERSA which are:
Neutrality: The Energy Regulator should be neutral to all market players without favouring one or other group (non-discrimination).
Independence: The independence of the Energy Regulator from the regulated companies is a prerequisite for any sound regulatory system. Independence from political influence is also desirable to ensure long-term stability of regulatory practices.
Avoidance of regulatory capture by some customer groups is also necessary for successful regulation.
a. Pravin Gordhan approved the Cost overruns in Eskom including Medupi and Kusile!
Corrupt tenders have further driven Eskom into debt. The culprits who are responsible for the failure and looting of Kusile and Medupi must be investigated and there must be no holy cows. This includes big catering contracts for both Medupi and Kusile involving prominent politicians.
NUMSA – contrary to Pravin Gordhan’s hollow statement which serves to be economical about the truth – demands that the ANC government of President Cyril Ramaphosa, in consultation with unions and civil society, appoint an independent team of Chartered Accountants to conduct a due diligence on all daily plant failures to establish who has been the beneficiaries of these cost overruns. Eskom EXCO Executives benefiting from Coal and Ash big contracts which did not follow proper commercial processes must also be investigated.
NUMSA is extremely irritated by what we regard as Pravin Gordhan’s opportunistic, new-found, Damascan moment where he has suddenly discovered that Medupi and Kusile are nothing but a wreckage that cannot deliver to the national grid because of inferior specification plant designs.
What is shocking is that Pravin Gordhan, during the period of the construction of Medupi, was serving as the Finance Minister and approved the additional costs!
Therefore, NUMSA calls on President Ramaphosa to fire Pravin Gordhan from the cabinet for his negligence because 90% of Eskom’s R419 billion debt can be attributed to the costs of Medupi and Kusile!
Primary contractors at Medupi and Kusile who failed to implement the designs should be pursued to pay compensation and damages for the failure of technical plants.
NUMSA rejects the retrenchments of workers which is now open and now hidden in the face of the elections. What NUMSA is demanding here is honesty and a turnaround strategy for Eskom in the interest of the country, the economy and the people. As part of the way forward, we should not be misled as we fully understand the urgent and the critical nature of the liquidity challenge facing Eskom whose debt is around R419 billion. We want to repeat that Eskom can be fixed and its liquidity can be sorted out.
Moody’s Ratings Agency Cautioned against the disastrous IPP’s
NUMSA holds a very dim view against the interference of rating agencies in the affairs of nation states, still when it comes to IPP’s, in 2016 Moodys saw the disastrous nature of IPP’s both for Eskom and the SA economy. However, the ANC government chose to ignore them in the interest of IPP’s. This is what Moodys had to say in 2016:
“The groups financial ratios remain very weak as a result of rising operating costs, primarily driven by higher energy costs, ongoing growth in power purchase agreements with Independent Power Producers (IPP’s), as well as the continued roll out of its CAPEX programme. This translated into a RCF/debt of 3.8% at 30 September 2016. We expect Eskoms credit metrics to remain very weak given the persistence of high operating costs, rising financing costs, and large planned capital expenditures.”
Against this reality, NUMSA is firm that a turnaround strategy for Eskom is simply to close the holes of this sinking ship.
This is how we can Fix Eskom
· NUMSA wants to put on record that as a union we are not against a transition from fossil fuels to renewables, but we are firm that there must be a real, well timed Just Transition, not the perverted definition outlined by Cyril Ramaphosa in his SONA speech.
· NUMSA is firm though that SA needs a socially owned renewable sector and that it must be introduced at a cost the country can afford.
· NUMSA is more than convinced that we should implement the turnaround strategy that focuses on closing all the holes we have cited above including the obvious consequences that will reverse the dropping of Eskom sales if IPP’s were to be disconnected from our national grid.
Such action will strengthen Eskom’s balance sheet, it will be able to service its debt and its working capital. In fact, this can buy us time until 2030 with no jobs being lost and the period between now and 2030 should and must be used to have an honest and frank debate about what energy mix our country needs. It is our view that there should be no holy cows; all energy resources and the ownership regimes must be put on the table for debate including nuclear.
The South African public and the working class in general, should reject the lie that power stations are closing because they have reached their end of life. We should all be aware that if this government is allowed to close these power stations, all coal mining and rural towns will become ghost towns in the same way when the ANC government adopted GEAR driving austerity measures, where the National treasury reduced allocations at the back of belt-tightening. With the closure of those power stations, those coal mining and rural towns will be ghost towns.
All South African municipalities have unqualified audits and can’t produce an LED and most of them survive at the back of Eskom’s electricity. If Eskom is allowed to close those power stations, municipalities such as Steve Tshwete will become ghost towns. It is criminal on the side of the state to have started the implementation of bid window 1,2 and 3 and 4 without a Social Plan.
NUMSA is very clear that there is no amount of manipulation of the public with the so-called unbundling, which is nothing but privatisation, which will fix the liquidity crisis facing Eskom. The lie that unbundling is not privatisation, and that it will not lead to job losses, falls flat and is collapsed by the reality that the South African public is being lied to by the current Board and the government.
Eskom workers will be retrenched after the elections
The hard reality is that they have already done number crunching of the number of workers they want to retrench. The timing is that they will only retrench these workers after the elections. Secondly, the other cheap route which has been carefully worked out, which is a form of retrenchment which they want to embark upon without any noise, is to quietly offer workers who are close to retirement, Voluntary Separation Packages.
NUMSA wants to be on record that we regard this as retrenchment and we reject it with the contempt it deserves. In fact, we regard it as discrimination on the basis of age. If Eskom wants to reduce costs, and strengthen its Balance Sheet, they would have to first sort out their mess.
As NUMSA, we are left with no option but to engage all unions in Eskom and all progressive federations in South Africa such as SAFTU, and Cosatu with whom we must embark on a rolling mass action in defence of Eskom. The fight we are fighting at Eskom is not the fight for Eskom workers but all workers across various sectors of the economy including the Public Sector workers who are next.
Aluta continua!
The struggle continues!
Issued by Phakamile Hlubi-Majola, National Spokesperson, NUMSA, 21 February 2019
