South Africa’s Government Employees Pension Fund (GEPF), the biggest investor in Eskom Holdings debt, said there were significant hurdles to a proposal that its bonds be converted to equity to help rescue the struggling power monopoly.

The initiative, which has been backed by the country’s biggest labor unions, was first examined by the Public Investment Corporation (PIC), which manages most of the pension fund’s investments, but the GEPF has not been formally approached about a potential swap, its investment chief said.

“We have heard that narrative being spoken of but the GEPF itself has not been approached,” Sifiso Sibiya told Bloomberg in an interview on November 22. If it was, then “members interests would be borne in mind and put first in terms of expecting returns and not negatively affecting investment outcomes.”

Swapping debt for equity was a complicated proposition, he said, because it would also require the R2.09-trillion fund to rebalance its holdings across asset classes to comply with its allocation rules.

With R82-billion of Eskom bonds, the GEPF holds about a fifth of the utility provider’s debt. Eskom’s bonds provide significantly above inflation yields, with debt due in 2026 currently returning 8.94%, but the company has been struggling to cover its own running costs and interest payments and is dependent on government handouts.

The GEPF remains concerned about the performance of state-owned companies, Sibiya said, and hasn’t increased its exposure to Eskom.

“Currently around 90-odd percent of our Eskom debt is government guaranteed and we would wish for that to remain in place,” he said.

South Africa’s utility giant can’t sell enough power to cover its costs and hasn’t properly maintained its aging coal plants. But labour unions, key allies of the president, oppose the restructuring plans that management says are necessary. The result has been a prolonged crisis in the country’s power sector.

In addition to the debt-for-equity swap, other proposals that have been considered include the government taking over half of Eskom’s debt.