State-owned electricity utility Eskom confirmed on Tuesday that it has declared a dispute with its three representative trade unions and the matter will go to arbitration on September 25.

CEO Brian Dames said the dispute was declared following three rounds of negotiations, during which the participants failed to reach an agreement.

The three unions with which Eskom has recognition agreements are the National Union of Mineworkers (NUM), the National Union of Metalworkers of South Africa and Solidarity.

It has been reported that the unions are seeking double-digit pay increases, with 15% demand having been flagged by the NUM and 12% by Solidarity. But in its third multiyear price determination (MYPD3) application to the energy regulator Eskom committed to containing wage increases and it has reportedly offered to increase wages by 5.6%.

In its determination, the National Energy Regulator of South Africa limited yearly increases for “corporate manpower to inflation of 5.6% plus a 1.46% margin to accommodate any above-inflation wage settlements”.

Overall, Eskom was granted average yearly increases of 8% for the five-year period from April 1, 2013, to March 31, 2018, which was half the 16%-a-year sought by the utility. It was, therefore, currently working on ways to deal with what has been calculated to be a R225-billion shortfall between the revenue allocation sought and the one granted.

Dames revealed previously that Eskom had already imposed a freeze on new hirings and said on Tuesday that work was still ongoing to deal with the cash-flow gap that would be most acutely felt in the latter three years of the MYPD3 period.

He stressed that Eskom was always willing to talks to its unions and reported that senior executives had been active during the three abortive attempts at finding a resolution.

“We have reached a point [in the negotiations] where we could not find each other and we declared a dispute . . . and that dispute is going through the recognised processes of mediation – that has been completed with the assistance of the Commission for Conciliation, Mediation and Arbitration. [But] we have not been able to find common ground and the process allows the parties to go to arbitration. So the matter will be arbitrated on September 25,” Dames outlined.

He stressed that workers remained at their posts and that there had been an agreement from all participants to “stick to the process”.

He also said work was progressing at its Medupi, Kusile and Ingula power station projects, including at the strike-prone Medupi site, which had experienced some recent disruptions.

“Despite the recent strike, there has been overall labour stability at Medupi. Good progress has been made and the first unit is expected online in the second half of 2014.”