Business

FEDUSA rejects proposed R254bn rescue plan for Eskom

FEDUSA rejects proposed R254bn rescue plan for Eskom

JOHANNESBURG  - The Federation of Unions of South Africa said on Monday it rejected a proposal to write off some R254 billion in state power utility Eskom's debt, calling instead for the entity to be placed under business rescue.

In January fellow labour federation, Congress of South African Trade Unions - a key ally of the governing African National Congress - recommended that Eskom's debt be reduced from around R450 billion in what it called a "pro-worker" special purpose finance vehicle involving the government, the Public Investment Corporation (PIC) and development finance institutions.

On Monday FEDUSA said a meeting of its leadership to deliberate on the crises facing Eskom and other state-owned enterprises agreed that rescue proposals could not be advanced "at the expense of workers".

"FEDUSA cannot support the notion of continuously throwing money into a black hole, as the unsustainable debt levels at Eskom has deemed the entity insolvent," it said.

"FEDUSA rejects the proposal to raid R254 billion of public servants pension money warehoused in the Public Investment Corporation to bail-out the utility."

The federation noted that the Government Employees Pension Fund, whose money is managed by the PIC, had already invested some R85 billion in Eskom.

The government should issue bonds towards raising money to relieve Eskom of its debt burden, FEDUSA said.

"However, a prerequisite to the aforementioned recommendation ... is the fundamental restructuring of the utility’s business model, including business rescue to make it sustainable," it added.

"Henceforth, FEDUSA will amplify its call for Eskom to be placed under business rescue to ensure that a proper turn around strategy can be sought, like the process that (national carrier) SAA is currently subjected to."

 - African News Agency (ANA)