Eskom: Gordhan open to pension bailout

As a way to prevent job losses.
Gordhan commended organised labour for wanting to be part of the solution and ‘not just antagonists’. Image: Moneyweb

Minister of Public Enterprises Pravin Gordhan has given a clear indication that Cosatu’s proposal to use money managed by the Public Investment Corporation (PIC) to support Eskom is being taken seriously.

Speaking at a lunch hosted by law firm ENSafrica in Cape Town on Tuesday, he commended the trade union federation for the proposal.

“Trade union federation Cosatu has come up with its own innovation to protect jobs within the Eskom environment,” Gordhan said. “That is 16 000 people.”

Read: Cosatu to present R254bn Eskom rescue plan

Although not explicitly stated, the problem is that retrenching people from the power utility would be extremely difficult politically. The minister therefore appears prepared to consider the Cosatu proposal, which suggests that the PIC together with the Industrial Development Corporation and the Development Bank of South Africa should take over Eskom’s debt.

“Cosatu is saying: use the worker’s pension money to mitigate the debt burden that Eskom has,” said Gordhan.

“That is a great move on the part of labour to say we are part of the solution, not just antagonists to any change that is happening,” he added.

Read: Cosatu wants private pensions to fund infrastructure

“Over the next month or two we are going to see fascinating exchanges, helping to get all the resources available in the country to save an important institution like Eskom and get it back to the levels of effectiveness and efficiency required.”

The rotters

Gordhan began his comments about the power utility by emphasising the extent to which Eskom has been hollowed-out by state capture, and the size of the challenge faced in managing its recovery.

“Eskom was one of the institutions what was severely damaged by corruption,” he said. “From the outside, one often hears the narrative: replace the board and CEO, put in a few new managers and you’ll get it right.”

However, simply replacing the leadership at the utility is not enough. Expertise, processes and experience all need to be restored.

“What we’ve learnt in the last 18 months is the systemic effect of corruption is huge,” said Gordhan.

“In the case of Eskom, it breaks down the engineering disciplines – what the engineers call their engineering rhythms – and it gets the operations to decline to a point where basic disciplines are not followed any longer and need to be reintroduced.

“And in the process of corruption, the good people either leave or the good people are marginalised, and the rotters rise to the top.”

Prepare for long-term load shedding

Gordhan also indicated that part of the plan for turning Eskom around will likely involve ongoing load shedding.

“We need a clearer idea – and it’s being discussed quite intently – of what kind of rigorous maintenance plan we can put in place that is both sustainable and lasting,” the minister said.

“What we’ve had in the recent past is lots of money spent, but a decline in Eskom’s effective output.

“So who is making money out of all this maintenance work, and what kind of quality of maintenance are we actually getting?”

Part of the solution, Gordhan suggested, would be long-term load shedding to take pressure off the system.

“We are likely to go through a period when we are going to have load shedding,” he said. “But we want to be in a position where the calculations that we are making at an Eskom level are as accurate as possible, not speculative, and substantiated with proper data and statistics.

“When that is ready, a proper and formal announcement will be made so that businesses can prepare appropriately.”

The split is coming

The minister added that the process of splitting Eskom into three separate entities – generation, transmission and distribution – is underway.

“The decision has already been made and the process has already started,” he said. “The transmission entity will be a self-standing entity in one form or another within the next month or so.

“That is the beginning of the structural change that we need to undertake as far as Eskom is concerned.”

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Jeez. He says the good people have left, only rotters left, systems broken. Then he says he wants to bail it out to save those employees? What. The. FCUK

This really is the final nail in the coffin.
Pensions are sacrosanct.
The ANC just don’t get it. They have destroyed S A. There is nothing left to steal, except the pensions of course.
Stupid, stupid, stupid.
There is no hope for stupid.

I concur.
So now he wants to spend somebody else’s pension money, because they have run out/through every other asset they inherited from that peskywhitelot in 1994.
Sounds like a greek tragedy out of ancient Athens.

The gamble COSATU and the ANC are making is that the union members care more about the potential Eskom retrenchees, than they care about their own security in old age.

Alea iacta est.

It is tragic that jobs will be lost, and that people will decline further into poverty. However, one of the most stupid things I have heard is that we can’t address issues with Eskom because we will lose 16,000 jobs – what about the other million jonbs that this risks? Those people need to be cut loose unfortunately, and the same with the rest of us that are not contributing to sustainability of the country.

If you go climbing a cliff and everyone is tied together and things start slipping, and the weight cant be carried, then you cut the rope. You dont have a choice.

Also, come hell or high water, I will not pay extra compared to what I already pay in taxes for these peoples’ pensions. That is where I will draw the line and actually pack up and go. I, the loyal tax payer, who is really carrying this country, feeding the mouths on the street, proclaim that I am tired of being sheet on from every angle.

Not “under consideration”. Once one of these politicians fawns over an idea like this, it’s as good as done. Have seen this so many times before. There is no consultation with business and no expertise within the bureaucracy to refer to. Just yes men. So theyre putting the debt in another pocket and carrying on just the same without a meaningful restructuring. So demoralizing

Public participation is only a tick box. Also applies to all local governments.

the good people either leave or the good people are marginalised, and the rotters rise to the top = AFFIRMATIVE ACTION.

Speaking of yours truly. I too once was a capable engineer in Eskom. I packed up in 1999 already when I experienced AA appointments that fringed on criminal.

One shudders to think how it further fell into the abyss.

Has Eskom done anything to attract the right skills? Imagine having all the right skills and a personal calling to do your bit for the country. Ready to join Eskom and be part of the solution.

Then one sunny February morning you read that the bureaucrats are rubbing their hands together, drooling over your future pension…

I have been an engineer for years, including doing some work for Eskom now and have never heard of this “what the engineers call their engineering rhythms” Who has, I am open to being schooled?

And so it begins. Do not imagine that they will stop at only government employees’ pensions. Your retirement annuities and your pension at work will be next, guaranteed. The cadres have been eyeing your retirement savings for a long time already. As far as is possible, stop contributing to private, South African based pension savings, and get your money offshore now, unless you fancy eating cat food like a Zimbabwean pensioner, and that will be on good days.

The Zimbabwe pensioner eating cat food is another of those urban legends.
In reality, cat food is more expensive than “human” food.

And so the 30% pass mark strikes again.

A tin of premium cat food is R14 at the local supermarket.

More generally, make sure your savings are under your own control. You can’t have that with an RA product. We are a long way away still from a scenario where funds are blocked from leaving the country. However if you continue to save via an RA, you may have a problem.

This was the first tax year where I decided that I am rathee going to be paying in to SARS by not using my RA tax deduction.

“And in the process of corruption, the good people either leave or the good people are marginalised, and the rotters rise to the top.”

Minister Gordhan says this as if it is an unfortunate and unforeseen failure of the system. In reality, it is a built-in feature of the socialist system that he and the rest of the ANC are doing their utmost to fully implement in South Africa. The trajectory over time is that it starts out as seemingly ‘benevolent’ social engineering (handing out social grants, preventing anti-competitive behaviour, employing more and more people in government). And then they run out of other people’s money – this is where we are now. At which point the true totalitarian colours will start showing themselves – ever increasing executive powers and interference in commerce, expropriation without compensation, extirpation of judicial oversight, prescribed assets, the list goes on. Take note that the minister has just informed you that the ANC is going to throw your pension money down the bottomless pit that is Eskom.

100% yes and to see the fatal built-in feature will take the anc another 100 years – they could even learn anything from zimbabwe’s short lived “freedom” land grab history

I have yet to see Pravin Gordhan being opposed to a bailout. Ever.

Or having had knowledge of corruption while he was finance minister.

Of course he is in favour of a solution that shifts the consequences of his party’s mismanagement to someone else.

The article fails to mention that the GEPF is a defined pension fund. What does this mean exactly? It means that pensioners are guaranteed a certain income. It means that any shortfalls are covered by taxpayers.

“ Trade union federation Cosatu has come up with its own innovation to protect jobs within the Eskom environment,” Gordhan said. “That is 16 000 people.”

Are they insane? The jobs are surplus, excess, redundant, killing the company. Selling them equity in the company in exchange for job security is like a cancer tumor paying the body not to get cut out.

One of the best descriptions yet ….

Ramaposer / Gordhan all talk about this corruption and maladministration like it was some alien virus that managed to capture the state and that they are now the warriors fighting this …

Not one of these half wits has ever actually acknowledged that it was directly them and the useless rotten and toxic anc that is the cause.

Completely out of touch .. with no idea and zero understanding.

OR to rephrase your headline; “Eskom: Gordhan open to another taxpayer bailout”

Taxpayers are on the hook for public sector pensions once our govt has plundered the PIC coffers to prop up a failing entity.

Rather ” …. prop up failing entities”. The land project for one and the NHI for another. The list is endless.

The humiliation of having to call these clowns “baas” and to watch them destroy this country is punishment enough for all the sins of apartheid. When will it stop?

South Africa currently has between 3 and 4 million people out work largely in part by businesses down scaling because of unreliable Electricity Supply . No power no economy. It’s that simple .

However The Do Nothing ANC is more worried about 16000 workers at Eskom ! The mind boggles…….

Why not do some QE to restructure Eskom? No, seriously.

The Americans did it to save GM, Freddie and Fannie Mack, and there are tons of other examples.

So we print the money to take out all of Eskom’s rand denominated debt and pay it down. So zero rand debt left.

The payout goes to local bondholders who spend it on flashy living? ….no. they use it to buy property, shares and other investments bouying local asset markets.

So Eskom gets saved, local assets get a boost, and everyone wins.

The only trick might be, is to stop too much of going offshore.

Yeah, we print ourselves out of debt. Worked for Zim right?
Tell me, what kind of inflation would we be creating printing R500 billion? Would you be happy paying R50 for Bread. Then go ahead and print good people. OPEC sells in dollars not Rands bud.

Because of inflation.

The USD is the backbone currency of the planet. Nearly every transaction that happens will touch a USD. This even includes purchasing ‘local goods’ because ultimately all goods these days are the product of the global economy and USD are used to clear nearly all of the background transactions. There is basically unlimited demand for USD. ZAR by comparison is just some backwater currency that barely moves beyond its borders.

…..next there will be no funds to pay government employees and grants( because the moneys are non existing). They will have no other option but to use this funds Can you imagine the anarchy,riots, klipgooiery etc. if they don’t pay these people.

“Over the next month or two we are going to see fascinating exchanges, helping to get all the resources available in the country to save an important institution like Eskom and get it back to the levels of effectiveness and efficiency required.”

What did the cyclone say to the coconut tree?

“Hold on to your nuts my boy, this is no ordinary blow job”.

I am a member of the GEPF and rely on it for monthly income. I am amazed at the glibness with which readers say that, because it’s a defined benefit fund, the government will pick up the tab if there should be any shortfall.
With what will the government pick up the tab? It’s bankrupt already, hence the eagerness with which it eyes what rightfully belongs to those who contribute, and have contributed, to the fund.
People who fondly believe that “the taxpayer” will be forced to honour the payments forget that GEPF pensioners are taxpayers too.
If you’re foolish enough to believe in government’s so-called guarantees, I have a bunch of bridges to sell you.

does not matter how one look at the financial, economical mess sa was worked into, from day one that the anc took over they did not know what the hell they were doing, like a naughty child into a room full of another child’s toys. the only reason why it was not realized from day one, was the fact that a fully operating system was taken over by the anc which, till today of what is left thereof, they are still not capable to manage it. simply rode on the name of Mandella – now that the party is over they don’t know what struck them and the rest of the country – all to the cost of the taxpayer – the 5 wise virgins’ oil is now used to try and keep the anc lamps burning.

Well said, I have been involved listening to the options of someone close to either resigning or going on pension with the GEPF, all modest amounts. No one can tell you which is best, likely or even recommended BUT all say there is a significant risk to getting a GEPF pension, even now as the PIC already holds quite a lot of government debt as I understand it. The advisers point to two possibilities. Legislation can change the defined benefits and then steepening inflation from ongoing poor economic policies, including bailing out Eskom, will destroy ZAR value, Zim style.

Eish.

COSATU therefor encourages those millions who loose their pensions, to rely on the government for their existence? What sense does that make? Save 16 000 jobs but put 15m people on the street to beg!!! What are these people thinking?

What a wonderful way to make the next generation pay for the sins of the current generation.

Eskom is 60% overstaffed with the ave annual salary of 650th+. This is 90% of the problem. Eskom should reduce their staff, not try and retain them.

Could you please share with the public how you arrived at 60% and also the information source of the annual salary?

That information is readily available from various sources. Go read a bit and educate yourself.

Just heard Donald Trump delivering the SONA. Nice to see him sticking it to the socialists.

American Civil War 2.0

One side has 200 million guns….the other side don’t know which toilet to use (including Obama)…

And the winning side has that great patriot, Preident Donald Trump. The Democrats are such a colloection of whinging losers, not even being able to evenrun a successful Iowa caucus, and they want to run a country.

Donald Trump is a terrible president really but somehow the Democrats make him look good.

You are a bona fide whack job if:

a) You think that will happen.
z) You had drunk so deep from Trumps kool aid that point (a).

Sad.

The face of failure.

First they will loot the public pesion funds, once that has been plundered. They will move along to Private persion fund. Eventually they will confiscate like Cyprus did.

This popular fallacy that jobs should be protected by some institution is quite destructive and is a powerful driver of unemployment. The Tripartite Alliance has been fighting for job security for 25 years now, and yet, our unemployment figure is the highest in the world! Anybody with an average mental capacity will try to deduce something from this fact. Unless that person has a vested interest to not acknowledge the facts. Union leaders don’t care for their members or for the unemployed, they are protecting their own personal income, and they use the labour laws to do so. This extortion is enabled and rewarded by the ANC.

When the profitability of the business model cannot be guaranteed, how can people who are employed at that business enjoy job security? When Eskom is bankrupt and the business model is a failure, how can the jobs be protected? They are unwilling or unable to face the consequences of their own actions and they are buying time with their collective assets, the pension funds. When their pension funds run dry, and Eskom is still bankrupt, as it will be, then they will move on to use the next source of “collective assets” – private pensions, and eventually, the purchasing power of the currency.

Gosplan kept on mining coal at a huge loss to protect the jobs of mineworkers in the old USSR. Strategies like this bankrupted the USSR, in the same way, that it will bankrupt South Africa. Politicians can only deliver job security by stealing the purchasing power of consumers.

Speaking of “average mental capacity” – SA’s national average IQ purported to be 72. Therefore at least 50% of population at 72 or less. US Defence Dept. will not employ anyone under IQ of 83 – those considered to be “untrainable” for any army function. Our politicians have a guaranteed bumper harvest of “brainwash-ables”. Bankruptcy virtually guaranteed.

“… That is a great move on the part of labour to say we are part of the solution…”
That’s what happens when you put a communist in charge of an enterprise. To claim that the idea to use money that is not theirs, is a “great move” is an insult to our intelligence.

Excellent idea to raid the pension funds. But only the COSATU member Pension Funds

“Retrenching people from the power utility would be extremely difficult politically” – translated means we will not do anything to risk the positions of the tiny minority of +- 800 000 ANC aligned people on the gravy train – (at a cost to the other 56 million people).

Let us hear what Cosatu’s pension fund members are going to say.

“In the past 18 months we saw how deep the corruption is” – Pres CR was appointed years ago to head Eskom’s war room – was he sleeping on the job – he only recently visited Kusile, instead of then, which shows how negligent and tardy he was.

Nor does Michael Obama ….

They bailed out Edcon and others using pension money, how dumb are you people thinking this was ever off the table? In every GEPF fund update they reiterate the purpose of funds being used to “develop” SA. Since Nenegate offshore markets have boomed, returns are MULTIPLES higher than leaving in hell hole SA. So what does that mean?…TAKE YOUR MONEY AND RUN!

Gordhan, unions and the whole bloody ANC are out of their cotton picking skulls. Save jobs in a 66% overstaffed Eskom.
Don’t these a holes hear what the IMF or anybody has to say.
While ANC in control we are totally lost.

Those are defined benefit pensions, so it will be up to taxpayers in the future to make up the shortfall. This is just kicking the can down the road.
What is the 250 billion actually for? Just to pay of loans? So you are borrowing money to pay off debt. Makes no sense whatsoever.

“Cosatu proposal, which suggests that the PIC together with the Industrial Development Corporation and the Development Bank of South Africa should take over Eskom’s debt”

IDC – is an SOE
DBSA – is an SOE
Gvt Pensions/PIC are defined benefit

All those institutions are taxpayer backed.

“That is a great move on the part of labour”…of course its a great move, its the classic lets spend someone else’s money to make sure we can sit on our backsides and do as little as possible and still get paid. The problem remains…you can ONLY spend someone else’s money …until it runs out you dumb-ass fools.

All Pravin and CR can see is bail out funds. Never a mention on cost saving as we would see in a private business. What they doing about corrupt and ghost suppliers,
Grossly inflated supply prices? From what I understand the corruption is still in full force and losing ESKOM billions daily so bail outs are supporting the looting.

Seems like a good underhanded and devious way to get to bail out the entity and let the taxpayer fund it. Being a defined benefit fund the government will have to make up for the shortfall. The question is whether they will be able to collect tax to afford this in addition to all the other theft that has taken place.

They have found a way to get around the outcry over bailouts – get some other government controlled institution do it like Development Bank of SA and now this idea.

Once again comrade Pravin speaks as if the Gov & ANC are 2 completely separate organizations. If COSATU is coming up with such brilliance maybe your time is up Mr Minister. After all your better educated to deliver strong medicine than financial advise.

Let them do what they want, just change the GEPF rules and allow contributors, currently employed or retired, to withdraw their pensions in full prior to such move. It would be interesting to see what it left in the fund after such a change of rules. Difficult to raid nothing!

While a PIC bail-out is MUCH BETTER than a tax-payer bailout what creating a direct link between those responsible for the Eskom mess by looking at the Eskom retirement funds for bail-out money. If you knew that your pension monies could be used to help fix up your mess I would think a normal person would act more responsibly. Then again using the ‘normal person’ approach could be a mistake on jobs-for-life Eskom employees.

They’re still pretending that the problems at Eskom are solely from state capture.
They’re misleading people into not knowing what happened in the 2002 meetings between Eskom and the ANC. Eskom in 2002 told the ANC bigwigs that maintenance was urgently needed. But the ANC, being commies and paranoid, were more inclined to believe that the Eskom heads were trying to get them to spend to much money and hence, bring the country down, destroying their reputation as being a competent black government.
Which, as it turned out, is rather ironic.

NOTE: This comment is not defamatory, discriminatory, slanderous or inciteful. Just based on fact as uttered by ANC members themselves. The 2 potential sensitivity triggers (one accusatory and one a quote) have been removed… though I’m not sure why they would have to be.

The decision makers(Gordham etc) are not thinking what is to the benefit and best for the future of the country. Gordham especially is under pressure for his job. So? He must listen to those to protect his own interest. Te moer with the country.

I hope they do it. I hope they take the money from the super-sized public sector, use their own savings from overpaid salaries and pump it into Eskom. There their chommies can steal it through their tender processes and the process of redistribution can continue, except this time the government employees also contribute, not only the taxpayer. Go go Gordhan!

Well of course he is. There is currently over R2 trillion sitting in the PIC, enough to easily clear Eskom’s debt and all of the other SOE’s.

In one fell swoop all the debt can be cleared, investment status can be restored, workers keep their jobs and SOE’s can even begin hiring again. The best part is that we can delay making reforms for maybe another 10 years. Whats not to like…

Every time I read these headlines I am relieved that I resigned and transfer my pension money from the Government Employees Pension Fund (GEPF) into a living annuity 5 years ago. Now at least I have control of where my money is invested and how much I want to withdraw annually. Once the GEPF has been completely looted the taxpayer will be liable to pay public sector pensioners. However when Greece was bailed out they were forced to implement pension cuts for all public sector pensioners. The same thing will happen here when all the money has been stolen and the government is forced to go to the IMF for a bailout. Very strict austerity measures will have to implemented before the government receives any bailout money. In the end no pension is guaranteed.

I am now tired of always referring to the past, still learning/studying the issues. 18 months is long enough for impact of new administration. It is also hapless. And its not like they weren’t there in the past 25 years anyway. Shifting the funding problem of over R400bn between DFIs and PIC is not the solution. That would not go unchallenged anyway.

Hold on, so you are saying those 16000 are the bad people as there has not be a bit clearing out of bad staff and you would rather put up pension fund money to help keep those “bad people” jobs?

That sounds idiotic.

The solution has been right in front of the ANC for more than a decade. The private IPP market works well, go and auction off 10 gigs of whatever power you want, regulate the market and facilitate investment as a government is supposed vs trying to hold onto big capital projects (either to steal or use to get other favors/political power).

I’ve given up on them doing the correct thing.

Interesting that no mentioned is made about illegal connections…how that money will be recovered…who is going to be held responsible for the corruption and will the money be retrieved or payed back. Get rid of the ministers that get all the money and subsidies and take their pension fund …use that to pay…bet you one minister pay and advantages will cover it.No mention of anything that will benefit us….but just once again the people suffering due to incompetent people will pay….and the people that cause everything once again gets away with it….

Retrenchments do not have to take place
Find out who are the rotten thieving employees and fire them.

That’s exactly what hes saying in this statement. Hes saying that people think that you can just remove the corrupt people and bring in new management. But it’s just not possible, says Pravin, because now they realize theres so little left to save – the whole entity is morally bankrupt, the thieves are everywhere, there is no value and no valuable people left. So you can’t just trim here and there. Make sense?

Ain’t it wonderful when a man with these credentials defines the survival of the economy? Thank Wikipedia …

Pravin Gordhan
Political party Communist Party (Before 2009)
African National Congress (2009–present)[1]
Alma mater University of Durban-Westville
Profession Pharmacist

End of comments.

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