Khoza should retract Eskom write-off comments

28 May 2020

The Democratic Alliance (DA) calls on Public Investment Corporation (PIC) Chairman Dr. Reuel Khoza to retract completely or clarify his comments in an eNCA interview today, that the PIC has submitted a proposal to turn R90 billion of Eskom debt into equity.

Firstly, we do not believe there is any such "proposal”, at least in any formal sense that is anything more serious than idle chatter. Secondly, if there were such a proposal, it would be patently unacceptable and possibly illegal.

Dr. Khoza’s comments are irresponsible, and inject uncertainty into the markets and fear among pensioners. His comments should urgently be retracted in full or clarified.

The idea of converting R90 billion in PIC-held Eskom debt into an “equity” stake is just a euphemism for writing off this debt. The PIC would have no hope of recouping the money, since the government cannot afford to buy this equity from them, and Eskom is not making any money to pay the PIC a return on investment.

Such a decision would also likely be in contravention of the obligations placed on the PIC by the PIC Act of 2004 and the PIC’s investment mandate from the Government Employees Pension Fund (GEPF). Part of that mandate is to ensure that it “provides sustainable longer term financial returns to clients in line with set benchmarks”. There is nothing sustainable about any investment in Eskom.

It is not the job of the GEPF or the PIC to subsidise the government’s mismanagement of State-Owned Enterprises (SOEs).

Issued by Geordin Hill-Lewis, DA Shadow Minister of Finance, 28 May 2020