Home South African Party to oppose Eskom’s ’desperate move’ to access pensions

Party to oppose Eskom’s ’desperate move’ to access pensions

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The Public Investment Corporation has been approached by the National Treasury to convert about R95 billion of Eskom debt held by the PIC into equity, says the DA.

File image: Eskom logo

THE DA will oppose what it terms a “desperate move’’ by Eskom that will ’’continue to prevent anyone having a say in how monies are spent’’.

A holder of Eskom debt, the Public Investment Corporation (PIC), has been approached by the National Treasury to convert about R95 billion of Eskom debt held by the PIC into equity, Ghaleb Cachalia, the DA public enterprises spokesperson, said in a statement on Saturday.

This was despite Eskom being “in a utility death spiral as well as a debt spiral”, according to Olga Constantatos, head of credit at Futuregrowth Asset Management.

The PIC manages pensions on behalf of the Government Employees Pension Fund (GEPF).

“Government had been spending more money than it received for more than a decade and instead of approaching the International Monetary Fund (IMF) for funding or pursuing sensible privatisation options that include strategic private sector equity partners, it appears hell-bent on pressing ahead with a scheme which potentially opens our pension pot – larger than Germany’s – to risk,’’ Cachalia said.

Additional plans involve converting government-guaranteed debt into sovereign bonds. The bulk of Eskom’s debt (R350 billion) is already guaranteed by the government and the swop could put Eskom into technical default.

The rating agency Standard & Poor’s is on record as saying it would further lower Eskom’s rating should it undertake debt restructuring, which could be tantamount to a default.

“The Democratic Alliance will oppose this desperate move which will continue to prevent anyone having a say in how monies are spent – as an approach to the IMF would entail.

“The reality is that state-owned enterprises have failed and should be sold, allowing government to reduce its wage bill and foster an environment conducive to investment and job creation.

“The DA will engage global and local experts in the field of electricity utility and debt management to address this issue and expose the folly and dangers of government’s flawed approach – aimed at ongoing command and control that allows for a continuation of the profligacy that got us to this unenviable position in the first place.

“The question is, will the government take responsibility upfront for an increase in debt servicing costs, occasioned by a further downgrade of Eskom’s rating in the event of this hare-brained scheme coming to fruition?’’