Struggling Eskom must leave state pensions alone
6 February 2018
The civil rights organisation AfriForum today strongly opposed the Public Investment Corporation’s (PIC) loan of R5 billion to Eskom. The PIC yielded to Eskom’s request for a loan on behalf of the state pension fund, whose assets they manage.
“This loan has been feared for some time and now it has become a reality. While the challenges faced by the new management of Eskom to solve the electricity provider’s short-term cash flow problems can be understood, this remains a poor solution,” says Dr Eugene Brink, AfriForum’s Strategic Advisor for Community Affairs.
Brink further says that Eskom’s new management has not yet indicated how they intend to turn the company’s affairs around. “At this stage we have only received assurance that things will improve and some of the bad seeds have indeed been removed, although this loan surely does not promote trust. Irrespective of this loan, the new management has done nothing tangible to show that they can turn Eskom around.”
According to Brink the reimbursement structure of Eskom’s management must be reviewed, the outstanding money from municipalities be collected and irregularities with the supply chain be sorted out. “Looking at Eskom’s finances, even with a good management team there is a very slight chance that the situation will improve. They are incurring debt to pay off debt while their income is decreasing. Eskom has also used up more than R275 billion of its R350 billion state guarantee, while its debt currently stands at R367 billion.