The African National Congress (ANC) has suggested that South Africa’s pension funds could be “mobilised” to take over assets of struggling state-owned power utility Eskom.
The suggestion is contained in a discussion paper by the party’s Economic Transformation Committee (ETC). ETC’s chairperson, Enoch Godongwana, is set to formally launch the paper on Friday.
ETC says in the document, “There is a need for continued support for Eskom to overcome its immediate financial and technical challenges and to ensure reliable electricity supply.
“A solution needs to be found to Eskom’s debt problem, including the possibility of pension funds being mobilised to take over certain restructured Eskom assets.”
Eskom is labouring under a massive R450 billion debt and is unable to recoup enough revenue to meet its costs. It has also stifled South Africa’s economic growth in recent years by implementing frequent load shedding because of its ageing power stations.
Earlier this year, labour federation COSATU tabled a proposal at the National Economic Development and Labour Council (NEDLAC) for the Government Employees Pension Fund, through the Public Investments Corporation (PIC), to take over R250 billion of Eskom’s debt.
President Cyril Ramaphosa appeared to back this proposal during an engagement with the SA National Editors’ Forum (SANEF) in March.
“Where is the money in our country? In our pension funds. The Reserve Bank estimates [that] there are over R8 trillion in pension funds. Imagine if 10 percent of that went into alternative investments – that’s R800 billion for Eskom and water projects,” he said.
The ETC document also said South Africa’s monetary policies could do more to attract higher levels of investments and revive economic growth, which is projected to fall by around 7.2 percent in 2020.
It explained, “South Africa needs to deploy a wider range of pro-growth and pro-investment monetary policy instruments that are compatible with the reconstruction of an economy.
“The COVID-19 crisis has provided a clear indication of the role the monetary authorities can play in injecting resources into the economy and in using bond purchases to stabilise capital markets and put downward pressure on longer-term interest rates.”
Other proposals include accelerating the establishment of a state-owned bank, forming a state-owned pharmaceutical company and creating a special economic zone for renewable energy in Mpumalanga to save jobs as coal-fired power stations begin shutting down.