Cosatu Expects its Eskom Plan to Be Completed Within Weeks

(Bloomberg) -- The Congress of South African Trade Unions expects a plan that it's proposing to save Eskom Holdings SOC Ltd. from its debt burden to be ready within weeks, said the labor federation's parliamentary coordinator.

The labor group, an ally of the ruling African National Congress, has proposed using the state pension fund manager, the Public Investment Corp., and government-owned development finance institutions to cut the power utility's debt by 254 billion rand ($16.3 billion) to 200 billion rand. The company's dire finances have led to regular power cuts and stagnant economic growth.

While there was initially some disagreement within Cosatu as some affiliate unions were concerned about the plan consultations have now been held, Matthew Parks, the coordinator, said. The matter was discussed at the Presidential Working Committee, which groups labor business and other stakeholders, on Monday, he said. Still, labor unions not affiliated to Cosatu have expressed their opposition to the plan.

“We do appreciate that its a very emotional issue” because of state corruption, he said. “You are going to an institution that has been broken by corruption.”

Cosatu and Business Unity South Africa, the main business lobby group, had previously said they'd hoped a pact would be announced in last month's state-of-the-nation address, but then said more consultations were needed.

No urgency

Labor officials also pressed the the government over they see as its lack of urgency in selling broadband spectrum needed by telecommunications companies, finalizing the public procurement bill and setting a levy on exports of scrap metal, he said.

At a later meeting of the ruling African National Congress's National Working Committee, South African Airways, the state airline that's undergoing a bankruptcy process, was discussed, Parks said.

Under some of the scenarios being considered it could shed 6,500 jobs, Parks said. The labor group wants talks to be held with other airlines to absorb some of the jobs.

“We're adamant that government must honor its job summit agreement commitment not to retrench workers, this includes” SAA, he said in an interview. “We've told government they must look at alternatives to retrenchments including redeployments within state owned enterprises, the public sector and service. We won't agree to retrenching any workers.”

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, Rene Vollgraaff, Antony Sguazzin

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