PSA up in arms over PIC’s R5 billion Eskom bailout

“The PSA is shocked by the decision of PIC board and feel betrayed after all parties agreed in principle that no state-owned enterprise would be bailed out until we are all satisfied that governance has improved at these institutions. We oppose this bailout irrespective of how it is termed,” the public sector union said in a statement.

PIC, which administers the Government Employees Pension Fund (GEPF), announced on Monday that it has agreed to give cash-strapped Eskom a R5 billion bridging facility for a month.

The PIC said it was approached by Eskom for funding and that due diligence was done before approving the one-month lifeline to the power utility.

Eskom has been marred by allegations of corruption and state capture, leading to Parliament’s public enterprises committee establishing an inquiry into the affairs of the state-owned enterprise. The power utility has also been dogged by scandals of questionable contracts which have defrauded the power utility of hundreds of millions of rand, including a R1.6 billion payment unlawfully made to Trillian Capital and global consultancy McKinsey.

Last month, Eskom reported that its revenue for six months ending 30 September 2017 fell by 2% to R96 billion and cash from operating activities dropped 30% to R22 billion, with level of debt over R300 billion.

Eskom’s liquid assets had declined to R9 billion from R30 billion a year previously due to tariff increases of only 2.2% and a 1.9% decrease in electricity sales volumes, offset by cost containment measures.

PSA threatened legal action against the PIC, adding that the PIC board “cannot be trusted”.

“It is now clear that we cannot trust both boards to look after our members’ pensions. The PSA in the meantime is consulting with its attorneys to urgently look at declaring the whole PIC board illegally constituted after a due date given to prove its board’s legitimacy lapsed.”

“Our attempts to reason with Finance Minister [Malusi Gigaba],the GEPF and PIC boards has come to nought. This R5 billion illegal transaction will be met with necessary consequences for GEPF and PIC.”

The union represents at least 230,000 public servants. It has been at the forefront of turning the heat on Gigaba to allow union representation at PIC and GEPF boards. This, the union argued, would ensure that workers’ pensions are safeguarded and not used to bail out struggling state companies.