South Africa Unions Want Infrastructure Funded by Pensions
South Africa Unions Want Private Pensions to Fund Infrastructure
(Bloomberg) -- The Congress of South African Trade Unions, a key ruling party ally, is pushing senior members of government to consider its proposals to rescue the state’s indebted power utility before next month’s budget.
In addition to suggestions it made in a November document that civil servants’ pensions and a state-run unemployment fund be used to cut Eskom Holdings SOC Ltd.’s debt by more than half to 200 billion rand ($14 billion), Cosatu wants the government to consider making it mandatory for private pension funds to invest part of the money they control in infrastructure. It also wants workers to be represented on Eskom’s board.
Cosatu made its proposals at a meeting with senior members of the ruling African National Congress earlier this month and, according to a document seen by Bloomberg, they “received broad support.”
Union support will be key to reviving Eskom, which isn’t selling enough electricity to cover its operating costs, has amassed more than 450 billion rand ($30.8 billion) of debt and has way more workers than it says it needs. Cosatu, which opposes any job cuts, is an ally of President Cyril Ramaphosa and plays a central role in helping him retain control over the bitterly divided ANC.
“A discussion must begin between government, the PIC, labor, and the retirement industry on a sustainable, correct and progressive balance to be agreed to on prescribed assets in support of key public goods and infrastructure,” Cosatu said.
The PIC is the Public Investment Corp., which oversees state workers’ pensions and Africa’s biggest fund manager. Cosatu, South Africa’s biggest labor group, and the South African Communist Party are in an alliance with the ANC.
Proposals made by Cosatu in addition to those it made in November include:
- Eskom should be permitted by government to build its own renewable power plants.
- The utility must begin investing in battery storage for renewable power.
- A debt plan to recover the money owed by municipalities and government departments to Eskom must be implemented by deducting the money owed from their budget allocations.
- Electricity should be paid for in advance.
- Coal-fired power plants approaching decommissioning should be converted to use gas where possible.
- Solar panels should be mandatory for all buildings within five years.
“Further engagement between Cosatu, the ANC, alliance and government at a senior level will take place shortly to seek to find agreements on saving Eskom,” Cosatu said. “It is hoped that these can be in place before the February 2020 budget speech.”
South Africa’s annual budget will be announced on Feb. 26.
Still, Cosatu will face opposition from other labor groups. The Public Servants Association, which represents 237,000 government workers, said it opposes the idea of using its members pension funds to bail out Eskom.
“In the current economic environment that South Africa is faced with, this will have disastrous effects,” it said in a statement on Thursday.
To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net
To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Mike Cohen, Paul Richardson
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