All workers are equal, but Eskom workers are more equal than others

Cosatu’s proposal only addresses one of Eskom’s problems.
Image: Shutterstock

If Cosatu’s proposal for the Public Investment Corporation (PIC) to take over R250 billion of Eskom’s debt is adopted in its current form, it will send South Africa further down an increasingly steep slippery slope. 

Eskom has three core problems and all three must be addressed simultaneously. They cannot be fixed individually. The first problem is its massive debt burden of more than R450 billion, which the utility cannot service. The second is its dreadful operational efficiencies, and the third is the rapid development of new generating technologies which renders Eskom’s current vertically integrated business model obsolete.

Cosatu’s debt proposal only offers some short term relief for the over-indebted utility. However, if the government accepts the conditions Cosatu put on the table, it will delay the desperately needed restructuring required to fix the other two problems. This will ultimately put Eskom and South Africa in a much worse position.

Read: Cosatu wants Eskom deal to be announced at Sona
Eskom’s rescue plan must ‘not threaten financial sector stability’

Cosatu demands that not a single Eskom worker loses his or her job and that Eskom not sell or privatise any assets. The government should regard this as a deal-breaker because if Eskom is not structurally restructured, load shedding will continue, and this will lead to significant job losses in all sectors of the economy.

Private sector

Restructuring is not an unfamiliar occurrence in South Africa. In recent months we have seen several private sector companies undergo aggressive restructuring, where unpopular, but necessary decisions were taken to trim workforces and sell poor-performing and loss-making assets. Recent examples include Edcon, Massmart and ArcelorMittal. 

It’s not like the government does not know this. Finance Minister Tito Mboweni proposed such restructuring in his economic growth plan, published in August last year, which eloquently stated that Eskom’s restructuring is critical to its survival.  

The document reads: “Eskom needs to restructure and modernise its business in light of international developments as well as its own poor technical and commercial performance. Alternative models are being explored, such as the separation of generation assets — leaving the state-owned transmission company to buy electricity transparently from IPPs (independent power producers) and state-owned power generators.”

The document goes further: “Government could take a decision that Eskom should sell coal-fired power stations, possibly through a series of auctions. Through these auctions, Eskom would sell the power station itself, all its power station-specific obligations together with a power purchase agreement (PPA) at a predefined, power station-specific tariff. The PPA would entail new power station owners to supply a specific amount of electricity annually (an electricity budget) over the remaining lifetime of the power station to the Single Buyer Office at Eskom at a predefined tariff. 

“The revenue this could generate depends on the tariff assumptions, but assuming cost-reflective tariffs, the sale of these assets could raise around R450 billion.” (Eskom’s current debt amounts to R450 billion.)

Mboweni’s document also warned that the development of new generation technologies had rendered Eskom’s business model obsolete. “Eskom’s current business model is unsustainable, and its contingent liabilities pose a significant burden on the fiscus. Around the world, large dominant electricity producers have restructured to cope with technological changes such as the rise of smart meters, microgrids, self-generation, and small modular power plants. The old model of a vertically integrated, state-owned monopoly has been challenged, and new institutional models have been explored with different levels of unbundling, competition, and public or private ownership.”

Proposal rejected

Unfortunately, and probably unsurprisingly, the ANC (and Cosatu) did not accept Mboweni’s proposal. Mboweni went back to the drawing board and published a new version a few months later, where all references to the sale of Eskom assets were removed.  

Cosatu’s proposal should be seen in this context. The trade union’s plan is no longer a passive opposition to any meaningful restructuring, but an active attempt to limit Eskom’s restructuring to save jobs at the utility.

It’s almost as if Cosatu says all workers are equal, but Eskom workers are more equal than others.

Eskom faces severe problems, and unpopular decisions need to be made. But haven’t you heard that before?

Read: Finally, a credible plan to fix Eskom

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Sell the power stations and clear the debt. Those that add value will retain their jobs.

Eskom is insolvent, their assets will not cover their debt.

The only way out for SA is for Eskom to only manage the Distribution system. Allow private power producers to generate their own qunatities and allow the regulator to do its jobs whilst the allowing the regulator to put a standard rate which the municipalities have to adhere to or allow the municipalities to request special rates.

Unfortunately South Africans are taxed extremely high directly and “Indirectly”.

Get Eskom out of the Generation business unit.

Eskom can continue to manage transmission (high and medium voltage).

Distribution (low voltage: 380V -3 phase and 240V -1 phase) can be managed by local authorities, which are widely responsible for this already.

But for SA’s sake, get Eskom out of all generation. The corruption is killing the entire electrical power system and also killing SA financially.

No Eskom actually has a 4th major problem i.e. people don’t want to pay for electricity. It was reported in the Sowetan this weak how residents in Soweto paid a group of electricians from Sebokeng to make illegal connections in Mapetla, Rockville, White City, Central Western Jabavu and Dlamini. They then placed whistles near the electricity boxes and when anybody sees an Eskom inspector they blow the whistle. The community members then come out and ensure that the Eskom inspector leaves. They have also rejected the flat R150 fee per month because it is not affordable. “An elderly man said: “We are not ashamed of what we have done. Not ashamed at all. “Eskom failed us and we could not live in the dark forever. If they wish, they must come here and try to disconnect us. We will kill them. I am not joking,” he said. See article titled: “Soweto areas reconnect themselves to power grid BY PENWELL DLAMINI – 03 February 2020”

Not to forget the about R9 billion free house loans to employees plus all transfer and bond registration costs paid.

And so the saga continues with a handful of tax payers subsidizing the poor, the non payers, the corrupt bureaucrats
Three million out of a population of 55 million responsible for this entire economy.Not sustainable, not by a long shot!

AND THEY WANT TO INTRODUCE THE NHI ( Who sits on their panel of think tanks, or are the intellectuals captured?)

The Government is one clown short of a circus

That is another reason why the ANC is reluctant to make any effort to privatise or adopt honest business practices at Eskom. The article is childishly scared of stating the real “problems” the ANC (if it was honest) should face with Eskom.

They are, one, Eskom is packed with ANC supporters; deployed elite cadres at the top, union members lower down. All earning fat salaries and many incompetent or corrupt or both.

Two, Eskom is a fantastic source of loot via “BEE” tenders to ANC supporters for every sort of service and supply, all providing over priced or under specification material and services, sometimes nothing at all.

Then three, supplying free electricity to the “poor”, actually low and middle class ANC voters. Add ANC pals like Zim to the free list.

Needless to say, precisely nothing is being done to actually address these real problems.

Don’t Cosatu have somewhere to march to? And perhaps overturn some dustbins somewhere? Break a few shop windows and steal the shops empty?

So R250 billion is to be used to protect 30000 jobs? That is R8.3 million per job.

That’s why I’m willing to offer Cosatu “only” R5m for my vote and participation in their shenanigans. I’m confident that once joined, I could outmenouver those dimwits, soar up the labour union ranks and simply make demands to the detriment of our members. How difficult can the public sector game be, considering that you are up against those that have not even completed grade 12. Or perhaps that makes it even more difficult!

it’s also R4,170 per capita in SA.
Or R 208,340 per taxpayer.

The average Venezuelan has lost an average of 14 kg of bodyweight per year over the past 2 years. Insulin, antibiotics and antiretrovirals have become unacessable.

This is where the Tripartite Alliance is taking us. This is what the GEPF will get in return for their donation to Eskom. They are in fact buying the premature deaths of 20 million people.

It is a good measure of the level of dysfunctional of a government.

In all the countries where government officials are free to dispose of other people’s property, they are also free to dispose of other people’s lives. When the right to own property is disposed of, then automatically, the right to life is also disposed of. Human rights go hand in hand with property rights. The one is worthless without the other.

The government that can take your pensions, enforce a redistributive tax on you, coerce society to empower one group and to disempower another, who uses the law to enforce fraternity in the shape of BEE and who steals the rights of employers and gives those rights to employees, will eventually infringe on your right to life.

We have reached that stage where communism has proved an illusion. Fascism puts the rights of a certain race, a specific group like Cosatu or BEE contractors, or the rights of cronies and cadres above the rights of the individual. Who can say we are not a fascist state?

“I cannot possibly understand how fraternity can be legally enforced without liberty being legally destroyed” – Frédéric Bastiat

The difference is, Eskom workers are ‘HUMMING with ENERGY’ at a constant buzzzzzz! 😉

….well, except for the odd 4,5 hrs a day!

They should use Eskom Pension and Provident fund and the entire Cosatu pension fund in Eskom debt instruments to align the workers’ and unions’ interest with the interest of the company and the nation.

Thats the best idea , let Cosatu and the eskom employees put their pensions on the line. If this latest restructuring is going to work so well, why would they want to share the spoils… they can have them all

Speechless.
China released 2 million soldiers but re-educated them so they can enter the industrial/private sector. Eskom can do the same. Also, what exactly will happen if the ANC restructures Eskom? What will Cosatu do? What is this fear of job shedding?

To answer: (a) Cosatu makes a pretty penny (read many millions) out of monthly union member subscription fees if jobs at Eskom are shed and (b) stand to loose memberships/credibility in other sectors if they are seen siding with the capitalist dogs.

Implying: Stand to loose a quite bit in subscription fees if members are retrenched/fired, etc… at Eskom

This was a good article.

That is Ryk van Niekerk, chief editor, for you sir! 🙂

(In fact, I can’t fault any of the other contributors either. Larry is sensible; Ray & Tebogo tells it like it is & provoke thought; Patrick excels to get the desired attention; Suren very professional; Nompu’s English pronunciation on radio is better than 99% of Saffas…and I include myself; a few others names fail my memory but are also worthy of mention. Overall a great team, based on merit.)

Sir, please enjoy your complimentary 3 year Gold Moneyweb membership subscription-LOL!

@Snowy. Nice one….now you get back at me using the same witty remarks *lol* Enjoyed the chuckle on a Friday afternoon 🙂

Seriously, never had any need for MW Gold m’ship. Happy as things stand. Still sticking with my comment re a great combination of contributors (while we all may not always agree with, is besides the point) 😉

like the guy that blows his friday pay cheque on get drunk, then starts the cycle again the following monday. cosatu’s plan sounds like a chapter from the enron story – bailing eskom out with pension money is akin to trying to live in your house while it’s burning down and you have no insurance. if Cyril and ANC INC. this is good plan – then they are idiots. you’d be better of canning the excess staff and paying them to sit at home and do nothing instead instead of sitting at work and doing nothing. this is a self inflicted wound now they want to put the shotgun in their mouths and unload both barrels.

Cosatu needs to catch a wake-up that the days of ‘we demand’ are rapidly becoming obsolete. All that will happen if their greedy demands are always met is a complete collapse of the particular industry they are ‘defending’. Result: no jobs at all. With Eskom, they are prioritising the jobs of 30 000 workers over the rest of South Africa’s welfare. Just plain ridiculous, Cosatu. Time you guys were kicked into touch now, rather than later when you have destroyed all job-creating industries.

Those surplus to requirements Eskom employees and their super social grants masquerading as salaries.

The assets of the GEPF belong to its members. They do not belong to the GEPF, the PIC, the government and certainly not COSATU. Furthermore what makes COSATU think it is entitled to speak on behalf of the members of the fund? The members should be asked to vote on the proposal whereby a chunk of their assets will be gifted to a non performing, insolvent, corrupt entity in addition to their donations to other junk SOE’s that have already been made. It would be interesting to see the results of a members vote.

Why are the 16 000 excess workers at Eskom so special that they earn about R20 000 a month (at a guess) while being subsidized by the taxpayers, whilst the basic income grant only pays about a R1 000 (at a guess)?

Problem solving 101:
Item #1 – Identify the root cause of the root problem
Item #2 – Are you sure that you have the root problem and not a symptom or spin-off problem?
Item #3 – Identify the root problem.
Item #4 – Try again. Is there agreement of the informed and erudite?
Item #5 – Remember the first rule of problem solving – Do not impose your ideas or cover-ups. Seek only the irrefutable truth. Listen only to irrefutable evidence. Draw only irrefutable conclusions.
Item #6 – Identify the root cause of the root problem

This was passed on to me by my Grandfather when the problems at Eskom were first Identified in 1993.

End of comments.

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