Eskom says it would respect the High Court’s decision to reject its urgent bid to increase electricity tariff by 16% over the next two years. The heavily indebted power utility however added that it was encouraged by the judge’s statement that there was merit to its case.
It says the judge indicated that the National Energy Regulator of South Africa (Nersa) violated the basic principle of accounting by treating an equity injection as revenue.
Eskom brought an urgent application to have Nersa’s increases of 8.10% and 5.22% over the next two years set aside.
Eskom argues that without the increases, it could default on payments to lenders, triggering the immediate payment of its national debt burden of R318 billion guaranteed by government.
The Federation of Unions of South Africa (Fedusa) has proposed that Eskom be placed under business rescue as opposed to using public servants pension funds to bailout the ailing power utility.
Fedusa says it rejects the proposal brought forward by the Congress of South African Trade Unions (Cosatu) which suggests that the Public Investment Corporation should step in to take on R250 billion of Eskom’s debt.
The Public Investment Corporation manages R2 trillion of government employees Pension Fund.
Fedusa says putting Eskom under business rescue will ensure that outside and undue political interference in its operations and governance is prevented.
“We cannot be using workers money as I’ve alluded earlier on to rescue Eskom nor any other state owned entity. There has to be conditions attached to it; and what we are saying as Fedusa in particular, when it comes to the PIC and the GEPF (Government Employees Pension Fund), we have already extended via the GEPF to the tune of R85 billion. So this cannot be the only possible source of income to secure any state owned entities. So at this point in time we are calling for government to issue bonds that will support the process which is the underlying precept but essentially any kind of intervention must be taken and going for the extreme at this point in time, placing Eskom under business rescue is an option that must be exercised,” says Acting General Secretary at Fedusa, Riefdah Ajam.
In the video below, Institute of Race Relations Senior Economist analyses Cosatu’s proposal:
