NUMSA demands that Eskom workers are paid bonuses
24 July 2018
The National Union of Metalworkers of South Africa (NUMSA) has noted Eskom’s financial results presentation. We note and welcome the EBITDA of R45.4 billion, which is a huge step change from R37.5 billion achieved in the last financial year, backed up by very strong technical performance. This is particularly significant given a decline in sales volume of 0.9%. We also note and welcome the improvement in the liquidity position achieved. For this we salute our members in particular.
Eskom should hang its head in shame for the employee death toll
At this stage, we also wish to draw the focus of the nation to the fact that in this country, the lives of workers have become so cheap. We are extremely dismayed and shocked that an institution like Eskom could be reporting fatalities where the lives of 12 workers were lost. This is completely unacceptable against the backdrop of the huge death toll in the mining sector where dozens of workers have been killed this year alone. Employee safety it is a leadership issue. We do not think that Eskom leadership has taken accountability for this. We believe that the leadership of Eskom has not paid any special attention to address the health and safety of its own employees. For this they should hang their heads in shame.
Workers at Eskom deserve bonuses!
The State Owned Entity (SOE) suffered a net loss of R2.3 billion in 2018 compared to R0.9 billion in the previous year. This performance should be looked at in the context of an increasing EBITDA of R45.4 Billion and the declining sales at 0.9%. This points to overall increase in productivity backed up by a very strong technical performance by Eskom employees. For that, our members are entitled to their bonuses, which they contracted for at the beginning of the financial year. Our members had a performance contract with Eskom. They have met their part and Eskom leadership must now do their part and reward them.
We are dismayed that the Eskom board has chosen to deny workers bonuses. It is a fact that workers performed and met their KPI’s. Its dismal financial performance is because of mismanagement and looting, and not because of the performance of ordinary workers. Our members are being punished for the failures of senior executive management. NUMSA has repeatedly warned Eskom management that the issue of the bonuses is a deal breaker and will have a negative impact on wage talks.
We demand further investigations into irregular expenditure
We note the focus on the 1 049 disciplinary cases where allegations of corruption are an issue. We are particularly pleased that an additional 628 cases have been finalised. We stand with Eskom in the fight against corruption, to this extent, we welcome that Eskom has gone back to 2012 with its investigations. Furthermore, we are disturbed by revelations of R19.6 Billion in irregular expenditure. This dates back to the era when Brian Dames and Mpho Makwana were leading the SOE. We are shocked because this error represented, at least at face value, the highest standards of corporate governance. We therefore demand that no stone must be left unturned and the investigation should date back to the first load shedding of 2008.
The IPP’s are another mechanism to loot Eskom
We must now turn to the IPPs. NUMSA is disgusted by Mr Mabuza’s assertion that the renewable IPP project is cost neutral to Eskom and Eskom pays IPPs in advance. The annual financial results report released yesterday clearly states that, “the decision to sign PPAs with the IPPs has significant implications for our [Eskom] financial sustainability.” The same report also states that: the commissioning of IPP capacity will further constrain the optimal deployment of our [Eskom] plant, which has a marginal cost of production much lower than the incremental cost of IPP’s; this is contrary to NERSA’s requirement of using the least-cost merit order of dispatching plant.” It is ridiculous and reckless therefore for Mr Mabuza to suggest that renewable IPP’s are cost neutral.
We further note that Eskom purchases a unit of electricity from the IPP’s at a cost of R2,22 cents and sells it for 85 cents, when it can produce it at around 42 cents. We therefore demand to know why Eskom signed the renewable energy agreements on 4 April 2018 when the previous management of Eskom refused to sign them since 2015? We want to know what makes this leadership so special that they thought it proper to put the future of Eskom employees at risk and to significantly increase the tariff paid by customers and the public at large? The future of this country is manufacturing and industrialisation that must be championed at the back of our minerals, which must be beneficiated and diversified. Eskom as we know it in terms of base load must deliver a competitive tariff to champion such an industrialisation programme, and to electrify the country. The IPP’s are simply a money making scheme at the expense of tax payers’ money and there can be no doubt there are no jobs and no quality jobs that will be derived out of IPP’s. In fact, IPP’s deliver uncompetitive, expensive electricity tariffs and they can only destroy jobs and chase investment away.
The current investment in IPP’s in South Africa is an opportunistic seasonal investment that is taking advantage of the unwise decision by the South African government to impress the European climate change forces that have been behind COP17, COP21 and COP22. There is no country in the world that has taken money from its own national fiscus to prioritise the connection of IPP’s at the expense of jobs and industrialisation. In fact, countries like China and India support measures against global warming, but they insist that they will do it at a pace their countries can afford. They prioritise a Just Transition and a socially owned renewable sector. It is only mad South Africa that has given these kinds of guarantees to attract artificial investments like the IPP’s, no other country in the world would do something so utterly destructive.
This government gives IPP’s guarantees despite the IPP procurement processes being intensively expensive, for instance bid window (tender phase) 1, 2 and 3. But despite their expensive nature government went ahead and gave 20-year power purchase guarantee agreements. If it were not for these guarantees and the get rich quick scheme they presented to foreign investors, there would be no interest in investing in these IPP’s. And because NUMSA has exposed how expensive they are, the general obsession is to seek to prove that they can be much cheaper than the base load, which is a lie.
For anybody to make the argument that IPP’s are a pass through to the consumer is indeed absolute nonsense. You must be an idiot to believe it and to be prepared to make such an argument with the intention to convince NUMSA and its vigilant constituency with such a cheap argument. We know that if consumers were to buy directly from IPPs today, the price they would pay would not be a blended price of 85 cents, but the expensive R2,22 cents today and R2,26 cents in 2023, compared to Eskom customers who pay between 42 cents and 85 cents for electricity. This is why we reject the lie of a pass through.
Remember, the other hard reality is, once the sun sets, IPP’s can no longer supply energy to the grid. The coal base load has to kick-in to compensate. What is even worse is that this looting by IPP’s that destroys Eskom, is so secure in that it is driven by a must take principle of energy from the IPPs. This means the energy that is generated by IPPs, once it reaches the grid, is the first to be sold and the base load from our own coal power stations comes second. That is why IPP’s are a device to destroy the Eskom market and to impose a destructive, unaffordable electricity tariff onto the South African economy.
One need only look at the reckless nature of how this Board connected the IPP’s. They did so against Eskom’s own arguments which were published, and even their arguments in court were clear that any further connection of expensive IPPs will spell disaster for Eskom. Eskom’s own application in the RCA, which was already published prior to the signing of the IPPs stated:
When we challenged their signing of the IPPs in court, interdicting it, because it was not just going to destroy Eskom, but it was also going to destroy around 92 000 jobs in terms of backward and forward linkages in Mpumalanga Province, Eskom made a similar argument whilst at the same time, they were endorsing Minister Jeff Radebe’s signing of the 27 IPP contracts against their own interests as an entity. Their Senior Council, Advocate Barry Roux conceded in the North Gauteng High Court on 27 March 2018 that the signing of the IPPs was against Eskom interest, but of course they were not willing to dictate to the Shareholder. We reject this argument because Koko Matshela, the former CEO of Eskom, refused to sign for a period of more than two years, knowing that such an act by a GCE would have constituted reckless trading, and would destroy Eskom.
The other glaring example which was at the disposal of the current Board and the GCE that should have strengthened their resolve not to sign IPPs into the national grid is their own publication, dated 10 November 2017, which pointed out huge, accumulated losses “school fees” we should not have been paid to the total of R100 Billion, of which R9 Billion was lost in 2016 alone. Eskom paid these fees deliberately, when it was clear that it would destroy the Eskom market. They still went forward in signing the additional 27 IPPs knowing that they would bankrupt the SOE.
The Jeff Radebe rushed to endorse State Capture, in the form of the IPP’s
We have concluded that this Board by signing the IPP’s acted contrary to their fiduciary duties. This Board and the GCE, Mr Phakamani Hadebe, acted in ways that are completely unacceptable. For instance, we do not buy their flimsy argument that their shareholder, Minister Jeff Radebe, forced them to sign. Of course, Radebe was very desperate to sign into law another form of state capture, the exorbitant and expensive IPP’s, but both the Board and the GCE should have rejected and refused to take Radebe’s orders in the interest of good governance. We must say, this leaves us with absolutely no option but to view Eskom’s current GCE and the Board as nothing less than the deployees of the IPP’s. Their mandate is also to break up and unbundle Eskom and privatise it. Despite their denials, the ultimate goal is the privatisation of Eskom.
In the presentation of their current annual financial results, the GCE unconsciously confirmed in public that they have a big issue that the previous leadership of Eskom and the Board failed to achieve the National Treasury dictates to ensure private sector participation of not less than R63 billion, in what they frame as lost opportunities. The big question is, what is this lost opportunity if it is not their intention to privatise Eskom to the tune of R63 billion?
NUMSA remain firm and resolute that we reject privatisation of Eskom in any form. For obvious reasons, there is no free lunch. There is no private sector that will invest without the intention to accumulate and maximise profit. We are particularly irritated by this cheap attempt to pull the wool over our eyes and the eyes of the nation, especially in light of the reckless and arrogant statements by Minister Nene that the fiscal is constrained and that the government will not bail out Eskom.
Privatization of Eskom is the ultimate goal
NUMSA is more than convinced that the financial implications referred to above will lead to the privatisation of Eskom. Nature and form does not matter. Privatisation in a capitalist mode of production is and will remain the enemy of the working class majority. It doesn’t matter how the agents of capital try to couch it, privatization of Eskom will be disastrous for the working class majority and it must be stopped.
NUMSA has informed both the board and the Chair, Mr Mabuza and the current GCE, Mr Hadebe, that we have ben reliably informed that there is an intention to privatise Eskom. We know that the wealthy and influential Rothschilds family are advising Eskom on the process for privatisation and how it should be implemented. The Rothschilds have gone as far as recommending themselves to be appointed and that is why they have crafted the specifications on how to manage such a process.
NUMSA demands that Eskom management and board pay workers their bonuses!
NUMSA is calling on Eskom management, the current Board and the Minister of Public Enterprise, Pravin Gordhan and the Minister of Finance, Nhlanhla Nene to move swiftly and dump their current, provocative stance toward workers not to pay their deserved bonuses, especially in light of an improved EBITDA from R37.5 billion to R45.4 billion. We trust that in the meeting on Friday 27 July 2018, they will come with a commitment to pay the bonus and NUMSA and other unions are flexible that if they do not want to pay the bonus in line with 12% agreement, because they claim one or two qualifiers have not been met, they must be able to pay workers and ex gracia as it has been done in the past,
The struggle continues!
Issued by Irvin Jim, NUMSA General Secretary, 24 July 2018