Trade union federation Cosatu told Parliament that unless Eskom was allowed to invest in new modern generation capacity, its long-term sustainability remained at risk.
DURBAN – Trade union federation Cosatu, while welcoming the Eskom debt relief bill, has raised concerns about the conditions attached to it, in particular the prohibition on the power utility investing in new generation capacity.
The bill was passed by Parliament’s standing committee on appropriations after Finance Minister Enoch Godongwana announced the R254 billion debt relief during his Budget speech earlier this year.
The debt relief comes with conditions – Eskom is not allowed to take on any new debt for the next five years and cannot borrow in the capital markets.
Government has been considering various measures to address Eskom’s unsustainable R423bn debt burden.
The R254bn will cover some of Eskom’s debt, and will be paid in portions, R78bn for 2023/24, R66bn for 2024/25 and R40bn for 2025/26.
Matthew Parks, a parliamentary co-ordinator at Cosatu, said unless Eskom was allowed to invest in new modern generation capacity, its long-term sustainability remained at risk.
“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.
“For a variety of reasons, the power utility 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 lack of investment. Others are due to ageing infrastructure. Others are due to rising levels of debts owed to Eskom by municipalities, businesses, communities and even government entities.”
Cosatu submitted that the approved 18.65% and 12.75% tariff hikes in 2023 and 2024, would be a further blow to an already battered economy, workers and companies.
It said Eskom’s cost reflective argument was a deflection of its failure to abide by the prescripts of the Public Finance Management Act and to manage the utility in a climate free of endemic corruption and wasteful expenditure.
Reference was also made to the construction of the Medupi and Kusile power stations where the initial budget was overshot by more than 100% yet these stations still struggled to provide electricity.
To this end, Cosatu proposed that National Treasury should work with Eskom to identify all financial leakages, develop a mitigation plan and to report quarterly to the nation on progress made in this regard.
