Fix Eskom for the sake of jobs and SA’s economy

SOUTH Africa’s economy is facing its worst crisis in a century with unemployment at more than 40% and rising. Women and the youth bear the brunt of this economic stagnation with unemployment rates of 46.5% and 57.2%, respectively.

The economy, as measured by the GDP, shrunk by 7% in 2020. To put this figure in perspective, the analysis of Statistics South Africa underscores the fact that this is the biggest annual fall in output since 1946.

While Covid-19 has worsened an already bad situation, in our account of the deepening socioeconomic crisis that is currently engulfing South Africa, we can partially attribute it to the misguided macroeconomic policy framework that has been implemented over the years. Corruption and mismanagement coupled with this neoliberal anti-state macroeconomic framework that defunded Eskom over the years are the source of load shedding. The lack of investment led to a deteriorating infrastructure and as a result load shedding.

The crisis-ridden state of Eskom has dented investor and consumer confidence. It has squeezed workers of their meagre wages and threatens to suffocate fragile industries, in particular mining. It has interrupted the economy at a time when the government is struggling to deal with the country’s debt-GDP ratio and trying to alleviate the debt-service costs. Recent load shedding cost the economy up to R5billion daily.

Eskom with debts of about R424bn and rising is the ticking time bomb threatening to collapse the entire economy. The country is fast running out of options. Not only are the jobs of 44000 workers at Eskom at risk, but the entire economy will implode and take 14 million South African workers with it. Given this potential collapse of Eskom and the devastating impact that it will have on workers, Cosatu has expressed its willingness to support key interventions to ensure the survival of the power utility and the economy.

In December at Nedlac, government and social partners adopted the Cosatu drafted Eskom Social Compact that sets out clear interventions to help with reducing Eskom’s dangerously high debt to a sustainable level and fixing the power utility on condition that government and Eskom take the toxic ideas of retrenchments and privatisation off the table.

Sorting out Eskom and ensuring a reliable and affordable energy is critical if South Africa is to succeed in fixing the economy and overcoming the effects of the Covid-19 pandemic.

South Africa will not be able to achieve the necessary levels of economic growth with load shedding continuing to be an albatross around the economy’s neck. This also means the country risks losing out in the upturns in global commodity cycles, something that contributed immensely to the economic growth of the early 2000s and helped reduce government revenue shortfalls recently.

Fixing Eskom cannot be bogged down by ideological contestations like the futile concept of unbundling. Unbundling is a sideshow that has no role in fixing Eskom because it will not address the real causes of load shedding.

Rooting out corruption should be central in fixing Eskom. Outsourced operations are some of the channels through which Eskom is haemorrhaging scarce resources.

We need a review of all Service Level Agreements (SLAs) and contracts at Eskom because some of them have produced poor quality outputs. The idea of outsourcing of functions was introduced to save costs but in reality, they are a source of corruptive inflation of costs and looting. A comprehensive public audit of all Eskom contracts and expenditure should be instituted and must include coal supply contracts.

We insist that before any consideration of investing any funds at Eskom, the power utility must provide an analysis of the SLAs and contracts pertaining to outsourcing with a view to revoking those that haemorrhage resources and to implement insourcing.

We need a concrete plan on how Eskom plans to rationalise and align the generally huge packages of its senior management. It is unacceptable that even the regular bailouts given to Eskom incorporate these huge executive remuneration structures and exorbitant board fees. The question of performance or productivity is never raised, despite the fact that Eskom has been failing at a huge cost to the fiscus.

There must be worker representation on Eskom’s Board. Worker representation will help to build trust and enable workers to highlight problems at the highest level for intervention. The PIC, which manages workers’ funds, is already exposed at Eskom to the tune of R95bn from the GEPF and R9bn from the UIF in Eskom bonds.

Workers have a responsibility to safeguard and salvage their investments. Coal suppliers and IPP generation contractors must reduce their excessive prices, or their contracts should be cancelled, and Eskom’s generation mandate must be expanded by the minister to allow it to grow its own renewable energy generation capacity.

A comprehensive debt recovery plan must also be implemented to recover the R37bn owed by departments, SOEs, municipalities, communities (including Soweto) and consumers at large. There must be no exceptions.

The economic growth and welfare of the nation needs a working Eskom and a reliable and affordable supply of electricity. Cosatu’s mandate is to protect every worker’s job and pension, therefore, we remain available as constructive partners to work with all social partners to save and fix the power utility for the sake of jobs and the economy.

| ANA Archives NEARLY 44 000 jobs at Eskom are at risk, says the writer.