Tito warns: no pensions

MINISTER: ALL OF US MUST SAVE ESKOM

By 2022, the power utility will account for R244.7 billion of the total bailouts government has extended since 2008.

While Treasury’s budget provides no indication of government’s thinking around restructuring Eskom’s debt, Finance Minister Tito Mboweni has cautioned against a push for state worker pensions to be used to bail out the utility.

“It’s not a bad idea but we must be clear that we are not suggesting that only public service workers’ pensions must be used to save Eskom – if we are going to save Eskom it must be all of us,” Mboweni told journalists ahead of his presentation of the budget speech yesterday.

Over the past two months, high-level conversations between government, labour and business have taken place at National Economic Development and Labour Council (Nedlac), spurred by trade union federation Cosatu’s proposal to relieve the utility of R250 billion of its debt mainly using money from the Government Employee Pension Fund (GEPF) and state development finance institutions.

Government, labour and business voiced their support for the plan and drafted a framework that would form a social pact between the parties. But the question of using GEPF money, including that of other private pension funds, has put a brake on discussions as social partners tease out the details on how this will be effected without compromising the stability of the financial system.

Cosatu has since asked for public submissions on how to tackle Eskom’s debt.

Mboweni said the suggestion that the Public Investment Corporation’s investment in Eskom be converted to equity is a good idea and is an indicator that stakeholders’ ideologies about introducing private sector investment into Eskom are aligning.

Eskom is considered the biggest threat to SA’s economy, along with low growth.

The utility sits with a debt burden of over R450 billion that it is unable to service due to operational and structural inefficiencies, as well as non-payments from municipalities and certain customers.

“We make reference to Eskom in passing,” Mboweni said to the media outlining the details of the budget.

“We did not want to talk a lot about Eskom in this budget speech.

“I think the Eskom story is tired now and we do not have anything new to say about this,” he added.

Mboweni, however, said the state would do “whatever it takes” to ensure that there is stable electricity supply.

The budget review documents state that over the past 12 years, the state has given R162 billion in bailouts to stateowned entities – the quantum of which, 82% to be exact, has gone to Eskom. Other beneficiaries are South African Airways, Denel, SA Express and the public broadcaster SABC.

The total amount of bailouts will grow to R291.2 billion when you factor in the allocated amounts that will be released over the next three years.

This means that by 2022, Eskom will account for R244.7 billion of the total bailouts that government has extended since 2008.

No additional allocations to Eskom were made in the 2020 budget outside of the R230 billion announced in the 2019 budget that would be spread out over 10 years and the additional R69 billion announced in the same year.