Ramaphosa promises to correct lack of consultation with labour on Eskom unbundling

14th February 2019

By: Terence Creamer

Creamer Media Editor

     

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President Cyril Ramaphosa acknowledged on Thursday that there had been insufficient consultation with labour on government’s plan to unbundle Eskom into three separate companies, but he also stressed that the proposed restructuring would not result in privatisation.

In his response to the debate on the State of the Nation Address (SONA), the President said that inclusivity should be the fundamental principle that underpinned the country’s response to the Eskom crisis, the depth of which had become evident again with the return of load-shedding.

“We accept, as government, that we have not done enough to bring some of our key stakeholders, such as labour, on board on the various aspects of this matter, but we are determined to correct this,” Ramaphosa said, reporting that a “deep conversation” would be held with labour on Eskom in the coming days.

He urged stakeholders to reject the “false narrative” that the only way out is through bitter confrontation and conflict. “Our challenges will not be resolved in the streets, but we will gather around the table to find workable solutions.”

His speech came only hours after the National Union of Mineworkers (NUM) convened a media briefing to express its anger at the fact that the unbundling decision had been made in the absence of any prior consultation with the union.

NUM, of which Ramaphosa was the founding general-secretary, has 15 000 Eskom members and 3 000 more at Eskom Rotek Industries. It is also in a formal alliance, through the Congress of South African Trade Unions, with the governing African National Congress (ANC).

NUM president Joseph Montisetse indicated that the unilateral decision to restructure the power utility might even trigger a withdrawal of its support for the ANC in the upcoming May 8 election.

“If the ANC proceeds with the unbundling of Eskom without taking all stakeholders along, it is going to cost the party dearly,” Montisetse said.

Ramaphosa said the restructuring was but one component of a series of interventions that were required to turn around the failing organisation, which has accumulated R420-billion in debt, is set to report a R20-billion loss and requires government support before April to stave of insolvency.

“It is not a path to privatisation. I repeat, it is not a path to privatisation,” he stated.

It was also confirmed that Finance Minister Tito Mboweni would provide details on the measures that government would undertake to assist Eskom to stabilise its finances.

“It represents a significant commitment at a time when public finances are severely constrained. It must therefore be accompanied by – and must be dependent on – a credible, far-reaching turnaround plan that has both an immediate and a lasting impact.”

IN DEFENCE OF UNBUNDLING

Ramaphosa defended the splitting of generation, transmission and distribution into three separate State-owned companies on the basis that it would enable funders to “better assess risk and opportunity, and open space for new investment in the generation capacity we urgently need”.

“It will improve the benchmarking of performance, increase transparency, decentralise management and allow better oversight of Eskom’s different functions. It will simplify the management of what has become a complex and unwieldy organisation.”

Restructuring, he added, would reduce the risk of a Eskom to the economy and align the utility’s structure with international electricity trends, where the vertically integrated electricity model had progressively been replaced to “enable better regulatory oversight through a single buyer model, increase competition in the generation and distribution space driving down the cost of electricity for the economies”.

It was acknowledged that the restructuring would not solve the immediate electricity supply crisis, but Ramaphosa said it would position the company to more effectively meet the country’s energy needs into the future.

Earlier in the address, emphasis was given to the growing role of renewable energy in the South African electricity system, with 112 projects having already been procured.

“We will work with all stakeholders to ensure that our gradual transition towards new forms of electricity generation creates jobs, develops new capabilities and does not negatively affect the livelihoods of communities,” the President said.

To make the transition “just” could require the retraining of workers to equipment them for careers aligned with the new technologies being introduced.

The President also announced that he had constituted a Special Cabinet Committee on Eskom, which would be led by Deputy President David Mabuza and would also comprise the Ministers of Public Enterprises, Energy, Finance, Transport, Intelligence and Police.

The committee would be “seized with the matter of Eskom on a daily basis” and would provide Ramaphosa with regular updates.

Improving the maintenance of the existing coal fleet was highlighted as an urgent priority for addressing the immediate load-shedding crisis.

“Maintenance doesn’t grab headlines, nor does it strike most people as interesting, but an effective comprehensive maintenance programme, properly funded and led by skilled personnel, is the one thing that stands between reliable electricity supply and darkness.”

Edited by Creamer Media Reporter

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