Ramaphosa’s plan to save Eskom is a declaration of war

President Cyril Ramaphosa’s recent announcement that Eskom would be split into three business units has angered local trade unions, according to a report in the City Press.

The move is supported by the renewable energy sector, but trade unions see the change as the first step towards privatising the power utility – which they argue will result in many job losses.

South African Federation of Trade Unions (Saftu) general secretary Zwelinzima Vavi called the move a “declaration of war” and said they plan to retaliate by protesting in parliament during finance minister Tito Mboweni’s budget speech in February.

Saftu said it would orchestrate a national shutdown on 26-27 March, too, where its members would go on strike to protest the Eskom unbundling plan.

Cosatu told the City Press that unions would be willing to negotiate with the government on Eskom, but they would not accept any move towards privatisation of the power utility or any job losses.

“This is their mess, they can unbundle five times if they want to but no job should be lost even if it means they have to reskill the workers, they should do that,” said Cosatu spokesperson Sizwe Pamla.

Rescue plan and tariff increases

Ramaphosa announced that Eskom would be split into three entities in his State of the Nation address earlier this week.

The move aims to improve the reliability of power delivery by the utility while improving efficiency and profitability.

Eskom will be split into generation, distribution and transmission businesses under a state holding company, allowing each unit to manage its costs more effectively.

“This we will do without burdening the fiscus with unmanageable debt,” Ramaphosa said.

He added that Eskom is seen as a great risk to the South African economy by ratings agencies and international investors, and had entered a death spiral as a result of mismanagement.

“Eskom is in crisis and the risks it poses to South Africa are great,” Ramaphosa said. “We need to take bold and decisive action. The consequences may be painful but they will be even more devastating if we delay.”

Eskom has also pushed for a large increase in electricity tariffs to help improve its dire financial situation.

A recent report showed that the power utility had inflated the valuation of its assets to justify its application for a tariff increase of 15% every year for the next three years.

If the increase is granted, consumers and businesses would come under additional pressure, which would also be reflected in the wider economy.