Eskom refuses to engage in meaningful negotiations – NUMSA & NUM

Unions say the utility has been dismissive, arrogant and disinterested in adopting solutions

NUMSA and NUM joint press statement on Eskom wage talks

20 May 2021

The National Union of Metalworkers of South Africa (NUMSA) and the National Union of Mineworkers (NUM) have been provoked by the Eskom GCEO Andre De Ruyter and the executive management of the SOE who totally refuse to engage meaningfully in the wage negotiations at Eskom. Our experience of this process has been an Eskom executive management who have at all times attempted to frustrate this process.

They have been dismissive, arrogant and disinterested in engaging on and adopting solutions to the core issues which are collapsing Eskom, and it is these same issues that are an obstacle to us finding one another during these wage negotiations.

We want to remind the public that before talks even began, the Eskom executive management poisoned the atmosphere of negotiations by deliberately peddling lies and misinformation about what workers at Eskom earn.

The Eskom spokesperson Sikonathi Mantshantsha lied to the media by claiming that workers at Eskom earn an average salary of R773 000 per annum. The members we represent in the Central Bargaining Forum (CBF) do not earn anything near that amount and they represent at least two-thirds of Eskom employees, approximately 29 400 people. Workers in the CBF, the majority of whom are represented by the trade unions NUMSA and NUM are not executives and their salaries and packages do not even come close to the packages of executives.

As of 1 July 2020 salary scales, employees at lower task grade are earning a minimum of R175 000per annum salary (excluding benefits) and those at supervisor level in the bargaining unit are earning R477 300 per annum and that is the ceiling for those we ae negotiating for.

our members are earning a minimum of R175 000 per annum salary (excluding benefits) and the maximum is R477 300 (approx. 500K per annum). The ESKOM GCEO is earning 80% per annum compared to the lowest earner of a minimum of R175 000.00 per annum. That is the ceiling for the workers we are negotiating for, whose value, contribution and hard work are completely unappreciated by the current Eskom board, Eskom leadership and government.

This fake propaganda is not neutral and it is not an error. It is deliberate. The goal is to peddle a false narrative that our members in the CBF are spoiled and unreasonable and their demands are responsible for driving up the costs of the power utility. This is not true because the objective reality is that it is Eskom’s bloated coal costs and the cost of the REIPP’s which are collapsing Eskom, not workers ’wages.

This is the very same Sikonathi Mantshantsha who abused a strategic meeting between labour, the GCEO of Eskom and his senior executives who met to engage on the turnaround strategy of Eskom. This was a meeting which not only dealt with workers ’core demands and wages, but a meeting that was dealing with the strategic nature of Eskom in the history of South Africa, and how it must continue to play its strategic role, that of delivering a competitive electricity tariff to the South African economy to protect the current manufacturing capacity and to beneficiate our country’s minerals, championing localization to create the most needed, quality jobs.

This is necessary and compulsory to tackle the unacceptable levels of poverty, unemployment and inequality, and most importantly, to deliver reliable supply to take our country to take out of the current, permanent crisis of load shedding, which is destroying our country’s economy and plunging our communities through electricity cut-offs because they cannot afford electricity.

This so-called Eskom spokesperson, through his Twitter handle, decided to vulgarize such a meeting in the public. NUMSA and NUM are very clear that over and above his demagogical, self-serving attitude, he is completely clueless about what Eskom is. His conduct is appalling and is completely unacceptable. We are calling on Eskom leadership to take the necessary disciplinary action against him. We are very clear that he is less than a candidate to speak on behalf of Eskom.

Eskom has exposed the fact that they are about a malicious agenda to stigmatize unions by deploying a false, deliberate agenda of repeating lies until everybody believes it as truth, falsely claiming that our members would sabotage electricity supply during wage talks and therefore, that load shedding would increase during wage negotiations.

From the beginning, they have made it very clear that meaningful engagement is not their agenda. We want to be upfront that lies have short legs. There were no wage negotiations in 2019 and 2020, notably in December 2020, and at the beginning of 2021, long before these negotiations resumed, the country has been consistently plunged into load shedding. The fundamental question is, who is fooling who?

As NUMSA and NUM, in our collective resolve to defend Eskom as a strategic asset of the country, before we could present demands, having been mandated by our members, we needed to call on the Eskom leadership led by Andre de Ruyter to present to all unions the Eskom turnaround strategy so that workers ’demands for this coming round of negotiations are located and shaped within the context and theatre of Eskom’s turnaround strategy.

To our surprise, such an obvious or logical response was openly resisted by the Eskom GCEO and his management team. It took an unnecessary fight and a meeting with the Chairperson of the board to realize such a meeting. Of course, as NUMSA and NUM, we have been very clear and frank that the current board and Eskom leadership, the decisions that they have taken led by the shareholder represented by both Minister Pravin Gordhan and Gwede Mantashe have been consistent in acting against the interests of Eskom as an institution.

In the interests of calling a spade a spade, and out of our belief that the beginning of wisdom is to call things by their real name, we did not mince our words in advancing a view that straight talk should break no friendship.

We told both the Chairperson of the board and the current GCEO that from where we stand, both the current board of Eskom and the current GCEO, whilst they were appointed to act in the interests of Eskom as an institution as we know it, our concrete experience and concrete reality is that we have a board of REIPPs and a GCEO of IPPs and primary coal occupying leadership positions in Eskom and taking every decision which militates against Eskom’s interests and Eskom’s existence.

To be blunt, both the current leadership of Eskom and the shareholder are the ones who are telling Eskom customers to leave Eskom and go and self-generate electricity for themselves. They are doing this in the face of an Eskom that is consistently experiencing a decrease in sales.

NUMSA and NUM are calling on the South African public to note that we are not prepared, at the back of any form of state capture, to accept that the current government working with Eskom leadership be allowed to introduce another form of state capture whose sole target is to usurp and privatize our country’s energy provision and hand it over to private interests in the form of REIPPs, power ships from Turkey with 20-year contracts, and through coal, contracts owned and controlled by the stubborn, white mining oligarchy, a direct interest of minerals, energy and finance complex. Worst of all, Eskom leadership led by the current board and Eskom management led by Andre de Ruyter, year after year in their leadership tenure, they see absolutely nothing wrong, that year after year, they increase Eskom tariffs by no less than 12%, and consistently give primary energy an increase of up to 17% year on year.

Despite all of this, they have guts, in the middle of this wage negotiation, to give a lucrative 49% increase to Seriti and South32, whilst arrogantly giving poor workers a non-existent offer of 1.5%, a position NUMSA and NUM reject with contempt it deserves.

It is against this background that we, NUMSA and NUM, are calling on the South African public to reject privatization of our country’s energy provision and to join us in this principled and fundamental fight to defend Eskom, our country’s public utility and to be prepared to say no to this new, but old hyena’s crime where Eskom and all our SOEs are being looted and stolen from the South African public.

We demand that in the transition toward renewable energy, it is Eskom, and by extension, the South African public, that must own the future renewable energy sector in South Africa that delivers power to the economy and electrifies our communities. We further demand that Eskom must deliver quality maintenance to power stations and stop the current, reckless and costly burning of diesel and immediately bring to an end, the current, reckless load shedding that is destroying the South African economy and jobs.

NUMSA and NUM are together in rejecting the so-called unbundling or divisionalisation of Eskom. We want to submit that there is absolutely no need breakup Eskom in order to realize transparency and efficiency and it is a politically motivated lie to suggest that Eskom is a monopoly, as how can such be when referring to a state-owned entity which is supposed to be owned and controlled by the South African public.

What has been advanced in order to privatize our country’s energy provision is to present Eskom as a monopoly. This is an absolute lie to win the hearts and minds of the South African public through misleading propaganda and our collective call as the South African working class is that every conscious South African must reject this public manipulation.

The real agenda behind unbundling is to capture and hollow out Eskom’s Systems Operator to form an Independent Systems Market Operator (ISMO). This is to ensure the agenda to privatize energy provision is not disrupted, and therefore, through ISMO, it will be easy to facilitate the buying of energy from REIPPs and to ensure that this agenda is not disrupted.

Both NUMSA and NUM’s submissions bare testimony to how the South African public must reject both government and Eskom leadership’s agenda to destroy Eskom as we know it. We must be very clear that if this government and Eskom leadership can afford the exorbitantly generous increases paid to both coal and REIPP contracts, they can afford to give workers their earned, owed and justifiable increases advanced by NUMSA, NUM and Solidarity. To this effect, we unpack for the South African public our demands in detail and the detail of what NUMSA and NUM submitted in response to the turnaround strategy.

Break down of our demands:

One of our core demands is a 15 per cent wage increase but Eskom has offered only 1.5%. And when one analyses the offer it is clear that this is a section 189 restructuring process under the guise of wage talks, because the measly 1.5% increase which Eskom is offering is conditional upon workers accepting changes to their benefits and conditions.

We reject this with the contempt it deserves. We are also demanding an increase in housing allowance, and the closing of the Apartheid Wage Gap. We demand an increase in maternity leave from 5 months and 7 days to 6 months and other improvements on conditions of service. We are also demanding that the Eskom recognition agreement must be aligned to the Labour Relations Act.

Eskom claims it cannot afford any of our demands but it has refused to reduce the costs of primary coal and REIPP’s, which are its biggest cost driver, in spite of a directive from a cabinet in 2018 to re-negotiate these. In the 2020 financial year, the IPP’s total costs amounted to R28 billion while their contribution to the total electricity generated is a mere 5% whilst simultaneously accounting for 25% of the primary energy costs.

In the 2019 financial year coal costs increased by 14% and in 2020 coal costs increased by 16%. In simple terms, in 2020 Eskom spent R 71 730 000 000 (seventy-one billion seven hundred and thirty million rands) which is almost 72 billion rands Eskom calls this Generation Cost. In 2017, the generation cost was R52 billion and it has drastically increased since then to where it is today. Eskom confirmed that the price of coal went up because of price escalation and not because of increased volumes.

At the same time the Renewable Energy Independent Power Producers (REIPP’s) cost Eskom R128 billion in the last financial year alone. Clearly the Power Purchase Agreements (PPA’s) are milking Eskom. Eskom will not survive the hemorrhage that is caused by the REIPP’s. The parasitic relationship between Eskom and the REIPPs continues to be poisonous to the life of Eskom.

In some instances, Eskom is buying a unit of electricity for R2,40 and selling it at 90 cents. Eskom sells this electricity at a loss. We are told that this loss is mitigated by the pass-through concept, meaning that it is passed on to the consumer. On Tuesday night, during the meeting with Eskom GCEO Andre De Ruyter, he confirmed to us that the pass-through concept does not work as NERSA is unable to agree to very high tariffs that are caused by the REIPP’s pass through.

This means Eskom has to foot the bill for the REIPP’s. It is clear that no business will survive if it continues to sell products at a loss. In our response to the turnaround strategy, we have proposed again that the REIPP’s must be re-negotiated or reviewed. We also demand that Eskom should own 70% of the Renewable Energy space because there is absolutely no justification why taxpayer money should be used to benefit greedy capitalist leeches like the owners of the REIPP’s.

Whilst the costs of coal and REIPP’s have been allowed to balloon exponentially for the past three years, the group cost for salaries at Eskom has remained unchanged. In 2017 the wage bill was R33 billion and this has continued until the 2020 financial year where the Eskom wage bill was R32.9billion. The Eskom GCEO says workers must fund their own increases – this is a nonsensical proposal given these facts.

It is embarrassing to have a GCEO of Eskom who does not know how the company works. The salaries can never be self-funding because as a regulated business, all operational costs incurred by Eskom are regulated by NERSA through the MYPD4. In the last MYPD4 application, NERSA allocated a minimum increase to workers of 5.4% and primary energy was allocated a ZERO per cent increase. So effectively Eskom has taken money from workers to pay coal suppliers.

Eskom management has decided to forget about inflation as a reason for salary adjustments. Management dares to double the price for coal and REIPP suppliers, but they will not agree to pay workers who are the generators, distributors and transmitters of energy a living wage!

We will not allow workers to continue to be sacrificial lambs so that the leadership of the governing party can continue to loot the SOE through the corrupt relationships that they have with coal supply companies and the REIPP sector.

Eskom must reduce its cost drivers, in order to make the company sustainable. If this is not done, it will not matter even if workers get a 0% increase, because the cost of coal and REIPP’s will continue to collapse Eskom just as they are doing now. If Eskom is going to be turned around, then these cost drivers must be reduced, otherwise, Eskom will never be able to free itself from debt.

Seriti/South 32 deal

Corruption in Eskom has become an acceptable practice and nothing has changed. We thought that the current leadership will resist corrupt activities but that is not the case. State capture continues even under this administration. We are perturbed by the current deal with South 32 and Seriti. Eskom has agreed to increase the price of coal to accommodate the deal and yet they are pleading poverty.

Just like the power ships deal to provide energy which seeks to lock us into to deal at 10.9 billion per year for 20 years. We reject that Eskom can give Seriti and South 32 a whopping 49% increase on coal tonnage whilst they are refusing to give workers their deserved wage increase. To our utmost shock, NUM received an s189A from South32 even though Competition Commission approved the merger between Seriti/South32 and we suspect DMRE approved Section11. This is pure corruption daylight.

In conclusion, we recognize that the whole country is waiting for us and wanting us to resolve this because the outcome of this process is in the public interest. As unions, we take this process seriously and we have devoted time and attention in order to ensure that workers ’demands are properly represented, but so far, the management at Eskom has failed to show the same level of respect for this process.

We are headed for a deadlock if this management does not begin to seriously address these critical issues. We demand that Eskom must take seriously the submissions by NUM and NUMSA on the turnaround plan, which we are releasing to the public through this press conference and we call on them to meaningfully engage on our core demands and wages. The solutions we propose are not just limited to wage increases, but they are a basket of proposals that can turn Eskom around and return it to its former glory.

Labour plead with NERSA to continue doing their sterling work to manage ESKOM that is dismally failing to manage and want consumers/citizens to pay for IPP's.

Issued on behalf of Irvin Jim, General Secretary, NUM, 20 May 2021