Electricity
Electricity

There has been mixed reaction towards South African labor federation Cosatu’s proposal that state employees pension funds should be used to pay 250 billion rand (16.8 billion USD) of power utility Eskom’s debt.

At a business, labor and government meeting this week, Cosatu suggested that Public Investment Corporation (PIC) and two other finance institutions must invest 250 billion rand to assist in lowering Eskom’s 450 billion rand (30 billion USD) debt.

Business24

PIC is one of Africa’s largest asset manager with more than 2 trillion rand (134.3 billion USD) in assets, some of which is invested in different companies listed on the Johannesburg Stock Exchange.

South African President Cyril Ramaphosa’s spokesperson Khusela Diko said the president was in favor of the suggestion, saying this “should not undermine the investment mandate of the PIC.”

Eskom’s huge debt is a concern not only for government but also for rating agencies. Rating agencies are worried about the impact Eskom’s debt might have on the country’s public finances.

Jannie Rossouw, Head of School of Economic and Business Sciences at the University of the Witwatersrand, said pensioners funds must not be given to struggling state owned entities.

“The discussions are still at an early stage but this is a bad idea. You don’t take pensioners money and force them into a debt investment. It is unfair to the pensioners and they should object to it,” he told Xinhua.

While the labor federation, government and business leaders are still having discussions on rescuing the power utility, Rossouw said clarity on the investment into Eskom was still required.

“Let’s say Eskom receives the money, will they still pay interest? In this debate we all need to have an understanding of how pension works. If Eskom does not pay the interest, it means pensioners are subsidizing Eskom,” he added.

Opposition party DA also said it was opposed to the idea. Enditem

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