COSATU notes Parliament’s passage of the Eskom Debt Relief Amendment Bill 

28 February 2024

The Congress of South African Trade Unions (COSATU) notes Parliament’s passage of the Eskom Debt Relief Amendment Bill yesterday.

COSATU welcomes Eskom Debt Relief Bill overall and supports its passage by Parliament.  The Federation long championed the need for the Fiscus to take over Eskom’s unsustainable debt levels as part of a package of measures to enable Eskom to be stabilised, rebuilt and play the role it is meant to in the economy and has supported the thrust of the Eskom Debt Relief Act passed into law by Parliament in 2023.

Eskom is the nation’s most important economic asset.  It generates 95% of electricity and transmits and distributes 100%.  The entire economy, including all jobs and the ability of workers to earn a salary and take care of their families depends upon a functioning and modern Eskom.  In simple words, Eskom is too big to fail.

Eskom for a variety of reasons has incurred debts it cannot afford to pay.  Some of this is due to rampant theft and corruption, in particular at Medupi and Kusile.  Some are due to mismanagement, institutional neglect and a lack of investment.  Others are due to aging infrastructure.  Others are due to rising levels of debts owed to Eskom by municipalities, businesses, communities and even government entities.

COSATU first proposed in October 2019 that government take over at least half of Eskom’s debt burden.  We are pleased government heeded this call and adopted a plan to settle two thirds of Eskom’s debt burden at R254 billion.  COSATU’s proposals for a comprehensive plan to stabilize and rebuild Eskom were encapsulated in the Eskom Social Compact signed at Nedlac in December 2020 by government and social partners.

The Federation thus supports the objectives of the Eskom Debt Relief Bill and the Act and the relief they provide to Eskom.  We believe that this relief will help Eskom to shift its resources to ramping its maintenance programme, this is the fastest way to ending loadshedding and thus easing the burdens on workers, their families, businesses, the economy and the fiscus.

COSATU welcomes the positive aspects in the Eskom Debt Relief Amendment Bill and the Act and hope they will provide the support Eskom needs to escalate maintenance and end loadshedding.  The Federation is however concerned on the debt relief conditions attached, in particular the prohibition on Eskom investing in new generation capacity.  Unless Eskom is allowed to invest in new modern generation capacity, its long terms sustainability remains at risk and loadshedding will remain.

The Federation is concerned by a new clause in the Bill requiring Eskom to pay interest on the relief provided to it by the state.  This is a major departure from the objective of the Act which is to relieve Eskom of its suffocating debt burden to now requiring it to pay interest to this debt relief to the state.  The purpose of the debt relief was not to ensure debts were paid timeously but to free Eskom’s resources to focus on ramping up maintenance and investing in new generation capacity.  This shift is deeply worrying given that Eskom continues to struggle to provide reliable and affordable electricity and remains in a fragile financial space.

COSATU agrees with the Bill’s putting in place oversight mechanisms to ensure Eskom implements its turn around plans.  Treasury needs to work with Eskom to deal with its fiscal bleeding and develop an accurate cost reflective regime that does not budget for corruption and wasteful expenditure and expect the public to subsidise this.  Law enforcement organs need to play their role in supporting Eskom to tackle the criminality, cable theft, vandalism and corruption crippling it.

Issued by COSATU

For further information please contact:
Matthew Parks
Acting National Spokesperson & Parliamentary Coordinator
Cell: 082 785 0687