COSATU welcomes the Parliament’s passage of the Eskom Debt Relief Bill
22 June 2023
The Congress of South African Trade Unions (COSATU) welcomes Parliament’s passage of the Eskom Debt Relief Bill.
COSATU supports the Eskom Debt Relief Bill overall and its passage by Parliament. The Federation has long championed the need for the Fiscus to take over Eskom’s unsustainable debt levels as part of a package of measures to enable Eskom to be stabilized, rebuilt and play the role it is meant to in the economy.
Eskom is the nation’s most important economic asset. It generates 95% of electricity and transmits and distributes 100%. The entire economy, including all jobs and the ability of workers to earn a salary and take care of their families depends upon a functioning and modern Eskom. In simple words, Eskom is too big to fail.
Eskom for a variety of reasons has incurred debts it cannot afford to pay. Some of this is due to rampant theft and corruption, in particular at Medupi and Kusile. Some are due to mismanagement, institutional neglect and a lack of investment. Others are due to aging infrastructure. Others are due to rising levels of debts owed to Eskom by municipalities, businesses, communities and even government entities.
COSATU first proposed in October 2019 that government take over at least half of Eskom’s debt burden. We are pleased government has heeded this call and adopted a plan to settle two thirds of Eskom’s debt burden at R254 billion. This is in addition to the previous debt relief support the Fiscus had provided for Eskom in previous years’ budgets. COSATU’s proposals for a comprehensive plan to stabilize and rebuild Eskom were encapsulated in the Eskom Social Compact signed at Nedlac in December 2020 by government and social partners.
COSATU thus supports the objectives of the Eskom Debt Relief Bill and the relief it will provide to Eskom. We believe this relief will help Eskom shift its resources to ramping up its maintenance programme. This is the fastest way to ending loadshedding and thus ease the burdens on workers, their families, businesses, the economy and the fiscus. COSATU welcomes the positive aspects in the Eskom Debt Relief Bill and believes it will provide the support Eskom needs to ramp up maintenance and end loadshedding.
The Federation is however concerned with some of the debt relief conditions attached by Treasury, in particular the prohibition on Eskom investing in new generation capacity for the next 3 years. Unless Eskom is allowed to invest in new modern generation capacity, its long terms sustainability remains at risk and loadshedding will remain. COSATU agrees that the current focus on ramping up maintenance is critical and the fastest way to ending loadshedding, but that equally must be balanced with allowing and supporting Eskom to invest in its own new generation capacity. This is key if we are to prevent loadshedding from becoming a permanent feature of the economy and Eskom’s sustainability as a publicly owned entity.
COSATU agrees with the Bill’s highlighting the need to tackle the rising levels of municipal debt. However, government needs to development a comprehensive plan to tackle this existential fiscal threat to Eskom’s sustainability. The Federation remains opposed to the continuous double digit tariff hikes. They are suffocating the economy and making it impossible for workers to feed their families.
Treasury needs to work with Eskom to deal with its fiscal leakages and develop an accurate cost reflective regime that does not budget for corruption and wasteful expenditure and expect the public to subsidise this. The law enforcement organs need to play their role in supporting Eskom to tackle the criminality and corruption crippling it.
The Federation will continue engaging with government on these matters to ensure Eskom is provided the necessary support it needs to rebuild its generation capacity and end loadshedding.
Issued by Matthew Parks, Parliamentary Coordinator, COSATU, 22 June 2023
