‘We will obviously like the private sector to also put their money into Eskom. And obviously their confidence needs to be built up as we go along, and we are going to be building up their confidence.’
Cape Town – President Cyril Ramaphosa on Tuesday signalled his agreement with Finance Minister Tito Mboweni’s recent suggestion that private pension funds be committed, alongside the Government Employees Pension Fund, to reduce Eskom’s debt.
“We will obviously like the private sector to also put their money into Eskom. And obviously their confidence needs to be built up as we go along, and we are going to be building up their confidence,” Ramaphosa told a media briefing at Tuynhuys.
“So even private pension funds, we would like them to also put their money into Eskom.”
Mboweni raised the subject a week ago when he tabled his 2020 budget, saying it was fair idea to use pension funds to help to reduce Eskom’s debt of R450 billion but he believed the measure should not be confined to the savings of the Government Employees Pension Fund.
It raised the hot topic of prescribed assets and Ramaphosa noted that the post-apartheid government opted not to revive the policy the old regime had in place for four decades but found that the other approach, of alternative investments, had not yielded the desired results.
He said that the South African state did not have deep coffers and that much of the savings in the country were to be found in pension funds. In the past, he said, this money was used to build the foundations of today’s state-owned companies.
“The big question is, and this is where Minister Mboweni’s suggestions come in, should we not be looking at other sources of money?”
Ramaphosa said talks on the proposal to bring into play pension funds, which was put forward by the Congress of South African Trade Unions (Cosatu), had progressed well with another round of negotiations at Nedlac on Monday.
“They are still committed to the proposal they put forward, all of them … and they tell me that ‘Mr President it is 80 to 90 percent there and we are making tremendous progress’.
“Obviously, I am glad that they have not been distracted by the barrage of criticism and negative publicity on this very unique and historic compact that the social partners have crafted.
“They are speaking to the task of finalising their compact and they are improving it as they move along, which for me is quite pleasing.”
The plan has been slammed by the official opposition and trade union Solidarity.
The president conceded that fears for the security of pensioners’ money given Eskom’s dire financial state, were understandable.
“People are exchanging views and thoughts. Ostensibly anyone would be concerned that we should put your pension money into a loss-making entity and all your pensions will be lost,” he said.
But he argued that the proposal itself is premised on “an Eskom that is reformed, restructured and rebuilt, an Eskom which will have ridden itself of corruption, an Eskom which will have ridden itself of unfair contracts, an Eskom which will have followed the money …
“We are going to look at a revamped Eskom, an Eskom that will become investment grade again. And it is for that reason that I believe pension funds should not be fearful.”
He said the government had not taken a decision on whether it would guarantee the GEPF investment in Eskom.
However, since it is a fixed-benefit fund, the state must make up the balance if there is any shortage in the fund.
Hence a government guarantee is largely a psychological factor, and not issuing one means that the fund’s loan to Eskom will not reflect on the state’s balance sheet at a time when Mboweni is making a stab at fiscal consolidation to appease ratings agencies.
African News Agency (ANA)