South Africa: The Tentative Case for a Future PIC Investment in Eskom 2.0

analysis

Is there in fact a case to be made for a debt-to-equity deal to be done by the Public Investment Corporation in Eskom? Or perhaps the question is the opposite: Is there any other real option? And if so, what should it look like?

Late in 2019 Cosatu and Numsa suggested that the Government Employee Pension Fund and other pension funds be directed towards providing Eskom with some sort of debt relief.

Cosatu's proposal, presented just before the Budget in February this year, proposed the creation of a special purpose finance vehicle (SPV) holding about R252-billion in funds which would somehow be deployed to reduce Eskom's debt by the same amount. When Cosatu first made its proposal, it was controversial and sharply criticised for many good reasons. All pension funds must be administered in the interests of their members and not as a source of funding for over-indebted and loss-making utilities.

Whether as a result of pressure from its membership or the intervening Covid-19 pandemic, despite encouragement from the Presidency and Treasury, this plan, like many others, appears not to have gone much further. The Cosatu representative on this issue, Matthew Parks, is reported to have said that Cosatu understood...

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