If trade union Cosatu thinks it is a good idea to use pension money to fund Eskom, it should use its own members’ money and not that of other workers.
This is the view of energy expert Chris Yelland, who was commenting on Cosatu’s proposal to use civil servant pensions and a state-run unemployment fund to cut Eskom’s debt.
Cosatu met with the government, business, community, and labour leaders on 3 February to present its plan to rescue debt-stricken Eskom.
Key to this plan is the use of pensions and an unemployment fund to cut Eskom’s debt by about R254 billion, which would leave the power utility with around R200 billion to service.
This funding will use a special purpose vehicle which includes the Unemployment Insurance Fund, Public Investment Corporation (PIC), the Development Financing Institution, and Development Bank of Southern Africa.
This plan did not sit well with everyone. Trade union Solidarity has started a legal process to stop the capture of public servants’ pensions.
In a letter to the Government Employees Pension Fund (GEPF) and the PIC, Solidarity demanded that the trustees and the board of these institutions should not accept the plan to finance Eskom from the GEPF.
“If Solidarity does not receive such a guarantee, or if a decision is made to implement the controversial Eskom plan, Solidarity will take further legal action,” it said.
PIC not aware of the plan
The PIC’s acting chief executive, Vuyani Hako recently said they have not been briefed about a plan and that the first he heard of the plan was through media reports.
He added that the PIC has not been made privy to any Cosatu document which proposes this plan, or had any external discussions with the trade federation.
While Hako did not dismiss the idea of using PIC funds to fund Eskom, he cautioned that the investment would have to be consistent with its mandate towards clients.
“The PIC is a longstanding holder of Eskom bonds, as provided for by the investment mandate of the PIC’s clients. Eskom has to date honoured all its obligations whenever either interest or principal debts became due,” said Hako.
“Investment decisions by the PIC must be consistent with the mandates of its clients. These mandates are drafted taking into account asset and liability studies and are approved by the Financial Sector Conduct Authority.
“Any approach to the PIC about the possibility of investing in, or swapping investment instruments, must take into account the prescripts of these investment mandates,” he said.
Use Cosatu members’ money
Yelland said he struggles to understand how Cosatu can think of imposing its own terms and conditions on the PIC.
He highlighted that the PIC is the custodian of a wide range of pension funds and not just those of Cosatu members.
“Neither Cosatu nor its members are the lenders. The PIC is the lender,” Yelland said.
He proposed a solution – The PIC can ring-fence the pension funds of Cosatu and its members, and use only these funds for Eskom loans.