(4 minutes read)
· South Africa’s main business-lobby group-Business Unity South
Africa- welcomed proposals by the nation’s biggest labor-union
federation- the Congress of South African Trade Unions – to rescue
debt-stricken power utility Eskom Holdings SOC Ltd.
· The trade union’s plan would considerably reduce the debt of
Eskom with 200 billion rand debt, which they feel that is manageable,
provided urgent steps are taken to restore the capacity of its
generation and plug pilferages in distribution
· Eskom provides 95% of South Africa’s electricity
This is a rare occasion where views of the business lobby and trade
union tally. South Africa’s main business-lobby group-Business Unity
South Africa- welcomed proposals by the nation’s biggest labor-union
federation- the Congress of South African Trade Unions – to rescue
debt-stricken power utility Eskom Holdings SOC Ltd. This convergence
of views between the two parties, who most of the time are at
loggerheads augur well for the revamping of the debt ridden power
utility.
In the plan presented by the trade uni0ons to the President’s Working
Council, which includes government, business, community and labor
leaders, suggested that the state-owned institutions should take
over US$ 17 billion of Eskom’s debt.
The business lobby has welcomed this suggestion. Martin Kingston, vice
president of Business Unity South Africa, reacting to the trade
union’s suggestion said that the business community is in agreement
with the suggestion, indicating that the government should accept the
suggestion and give fresh lease of life to the power utility, which is
working its way to a rehabilitation path.
The trade union’s plan would considerably reduce the debt of Eskom
with 200 billion rand debt, which they feel that is manageable,
provided urgent steps are taken to restore the capacity of its
generation and plug pilferages in distribution. Eskom provides 95% of
South Africa’s electricity. But of late, Eskom faced many hurdles
including high running cost and inadequate maintenance, leading to
frequent plant breakdowns and rolling power outages. That was a major
drag on South Africa’s growth, particularly in the mining and
manufacturing sector. The power utility had to cut down its export of
power also to the neighboring countries.
Participants at the recently held meeting of the President’ s Council
urged that the utility should reduce its debt. Banks and other
financiers are becoming increasingly reluctant to fund the utility.
Therefore, the meeting also decided to explore the possibility of
tapping development-finance institutions and other bodies like the
state pension fund manager, the Public Investment Corp., for
mobilizing resources for revamping the power utility.
Both business and trade unions would soon start a discussion about
the use of prescribed assets, or private pensions, to fund the state
infrastructure behemoth for boosting growth. South African
President Ramaphosa was on record last year that he would tap the
nation’s 2.4 trillion rand private savings industry to foster economic
growth.
