We (conditionally) support Eskom's restructuring - SACP

CC says this as long as this does not open the door to privatisation nor place workers’ jobs in jeopardy

South African Communist Party

Central Committee statement

24 February 2019

The South African Communist Party Central Committee, the highest decision-making body of the Party between National Congresses, held its first plenary session for 2019 from Friday to Sunday, 22-24 February 2019 in Braamfontein, Johannesburg. General Secretary Cde Blade Nzimande presented the political report from the Political Bureau of the Central Committee.

Entitled “The vanguard role of the Party in economic transformation: The crisis of social reproduction and our Red October Campaign”, the political report focused on the tasks to mobilise our Party structures and society to address the many economic and consequent social challenges facing mainly working class and poor communities.  

The political report also focused significantly on the challenges of economic and broader social transformation and development in our country, and on the tasks of the SACP to continue playing a vanguard role to advance, deepen and defend the objective interests of the working class and poor. The Central Committee attached great importance to this strategic task within the context of the urgent necessity and imperative to move our national democratic revolution on to a second radical phase.

The Central Committee also briefly reflected on the positive role and contribution of the SACP over the last period in continuing to stand firm against state capture, and throwing its full weight behind the efforts led by President Cyril Ramaphosa in cleaning the state, including State Owned Enterprises, of the corruption and malfeasance that threatened to run out of control over the last decade.

The SACP is of the view that it would be incorrect to describe the past nine years as the ‘Nine Lost Years’. A lot of achievements were made by the ANC-led government over the past decade. These include huge investments into infrastructure, increased life expectancy largely because of the rolling out of HIV treatment, and increased investments into education and skills developments. These are some of the collective achievements that the ANC and the Alliance are extremely proud of.

However, there have been wasted opportunities over the past nine years, and mostly as a result of the corporate state capture agenda that crept in and gained increased precedence, as well as, associated with the agenda, the governance decay, mismanagement and looting of public resources and national wealth. State capture brought a number of our important state entities to their knees. The Central Committee reaffirmed the SACP stance that those responsible for this corruption must be held to account.

State-Owned Enterprises and national energy security crisis

Inevitably, the Central Committee had an extensive discussion on the crisis in State Owned Enterprises, particularly Eskom. The meeting acknowledged the enormous damage inflicted on these entities through a combination of poor policy decisions and state capture and other forms of corruption.

For instance, at Eskom the last generation build was in 1984, followed by a series of blunders in the 1990s. Deals were struck with BHP-Billiton for Eskom to supply 25 years of electricity at one-fifth the price paid by other consumers to aluminium smelters at Mozal in Mozambique, and Bayside & Hillside in Richards Bay. These energy guzzling, capital-intensive smelters were reported to be consuming a full 9% of all Eskom electricity in 2013. What is worse, the alumina powder is imported from Australia and Brazil (and not mined in South Africa), and most of the product is then exported. In short, there was minimal local job creation, no beneficiation of South African mined commodities, a massively subsidised tariff, allowing a major multinational to plug into our grid, and then sail away with mega profits after consuming more electricity than major metros in South Africa at a time when we were suffering rolling power outages. This was a major legacy of the Mbeki/1996 class project bestowed upon subsequent administrations.

Another major legacy from that era, designed within the logic of the neoliberal economic policy of Growth, Employment and Redistribution (GEAR), was a decision not to invest in new power generation capacity at Eskom, despite the “White Paper on Energy Policy for the Republic of South Africa” produced in December 1998 projecting that electricity demand was likely to outstrip supply by 2007, and further acknowledging that long-capacity expansion lead times required strategies to be in place in the mid-term to meet growing demand.

It was in 2004 when it became clear that power generation capacity was running low, and older power stations were approaching the end of their life-cycles, that belatedly the decision was made to embark on the two mega-generation construction programmes – Medupi and Kusile, with construction starting in 2007 and 2008 respectively. As is now well-known, these two projects were hopelessly misdirected in terms of scale and design.

They are among the largest coal-fired power stations in the world, and their design was “bespoke” – that is, not based on pre-existing models. With its skill losses and a more than 20 year gap since the previous major build programme, Eskom’s capacity to project manage was hopelessly inadequate.

In 2007 Medupi was projected to cost R69 billion and Kusile R81 billion. By 2016 the official Eskom costs had doubled to R145 billion and R161 billion (although independent analysts suggested they were actually R208 billion and R239 billion). Despite the doubling or trebling of costs, not all of the units have been completed. There are ongoing breakdowns and technical failures, and Medupi and Kusile are only supplying around 50% or less in terms of reliability, contrary to the promise made when the projects were started.

Further, the transition to renewable energy generation was designed not in the national interest of investing in Eskom and securing its future in the sphere of cleaner energy production. Consequently, Eskom was forced to purchase renewable energy from the companies involved in the favoured private enterprise model of Independent Power Producer (IPP) programmes as opposed to building state capacity and mobilising social participation. This has had a huge negative impact on both Eskom and the consumers particularly, but not exclusively, through the tariff structure. The Central Committee therefore welcomed the consideration to initiate a renegotiation of IPP contracts to reduce the pressures on Eskom and consumers.

Consistent with the SACP’s previous statements on the challenges at Eskom, the Central Committee reiterated:

- We are fully aware of the very severe crisis the Eskom challenges pose for the country as a whole and the urgent need to resolve the situation expeditiously and sustainably.

- We are strongly opposed to the privatisation of Eskom but support restructuring provided it is aimed at making Eskom function more effectively and efficiently – and most importantly does not open the door to privatisation nor place workers’ jobs in jeopardy.  

- The terms of the restructuring must be concertedly negotiated with the trade unions and other stakeholders with the aim of seeking consensus.

- Eskom must take primary responsibility for the generation of cleaner and renewable energy.

- Immediate and decisive action must be taken against those who have looted Eskom and every attempt should be made to recover the financial losses from them.

- Decisive action also needs to be taken against anybody responsible for sabotage in Eskom.

- With the severe budgetary constraints, the state has to continue to provide financial and other support to stabilise and strengthen Eskom, but this must be accompanied by proper oversight and accountability.

SACP leaders have already met and will continue to engage with our Alliance partners, including the NUM, the government and all other stakeholders to contribute towards addressing the Eskom and national energy security challenges.

The Central Committee reaffirmed the strategic relevance of the Party’s policy position that efficient public entities pursuing a developmental mandate remain critical to advancing a second radical phase of the national democratic revolution. The SACP will strengthen its efforts to engage on the critical challenge of building and rebuilding state capacity and institutions from specifically a working class perspective. Particularly this means ensuring that any reorganisation that may be necessary to rebuild SOEs must not off-load the burden on to the workers. In addition there was inadequate oversight by government and parliament, as well as a failure to ensure consequence management by the relevant bodies.

The SACP is mindful of the changes in technology and the imperative to bring about a different and adequate energy mix that reduces carbon emissions. The Party strongly believes that publicly owned institutions, following a developmental mandate, need to be active in the development of new technologies.

While addressing the crisis in SOEs, and in Eskom in particular, is without doubt the most urgent and immediate task on the economic front, the Central Committee also committed the SACP to ensure that priority is given to other programmes and projects aimed at achieving inclusive growth, job-creation and a radical reduction of inequalities.

It is in the interests of the working class to ensure that we build and rebuild the policy tools necessary for a more effective and increasingly efficient SOEs industrial strategy. In the coming period, the SACP through its Central Committee Economic Policy Commission will be engaging with progressive political economists, academics and its allies in the labour movement to develop concrete proposals to advance the interests of the working class and poor.

Retrenchments in the mining sector

The Central Committee noted with revulsion the continuing retrenchments onslaught by capitalist bosses in the mining sector. The SACP denounces the rationale that has been given by the mining companies to try and justify the retrenchments. The retrenchments are driven by nothing but profit maximisation at the expense of workers. The SACP will be meeting with its ally, Cosatu, and its affiliates, to strengthen the campaign to fight retrenchments. Part of this work requires building wider working class unity through forging a Popular Left Front that involves communities as well.

SACP supports Cosatu on Public Investment Corporation Bill in Parliament

Through engagements with Cosatu and others, our own experiences and the media, we are aware that from 2015, there have been constant allegations of bad investment decisions and corruption at the PIC. The Public Service Association threatened to withdraw from the PIC and trade unions demanded that they be represented by their nominated experts on the PIC Board. There have also been endless fights within the PIC. This has contributed to the failure by the PIC to address these and other issues. The ANC’s Parliamentary Finance Committee adopted a resolution in 2017 to introduce a draft Committee Bill to address these issues, in consultation with all stakeholders. The DA opportunistically tried to use the resolution to also introduce a Private Members Bill on the PIC, but the Committee’s Bill prevailed.

After 18 months of intensive engagements, the Committee voted on its PIC Bill. It provides for union representation on the PIC Board; the Finance Deputy Minister to chair the Board (and protects losses to the fiscus by bad PIC investment decisions); and in implementing the instructions of the depositors the PIC consider developmental guidelines.  The Minister and the Board of the PIC also have to be more accountable to Parliament. The Bill is part of the overall commitment of the Alliance and government to tackle corruption, and has been supported by the relevant parliamentary and other ANC structures.  It has already been voted on by the parliamentary committee. The SACP supports the Bill and calls on the ANC to vote on it in the National Assembly as soon as possible.

The SACP also looks forward to the recommendations of the Mpati PIC Commission Report and the Bill that the Minister of Finance will introduce thereafter which will propose further amendments to the PIC Act.

The PIC is extremely important for the workers and the country as a whole, particularly in the present very difficult economic climate, and there is a need for the Alliance to work together with government and other stakeholders to strengthen the PIC.  We call upon our allies, COSATU, and the broader progressive trade union movement, to mobilise in support of these changes and improvements.

The forthcoming democratic general election

The Central Committee endorsed the broad progressive thrust of the proposals in the ANC election manifesto for the forthcoming general election. The SACP has started work to campaign for a decisive victory of the ANC for our people, the majority of whom is the working class. This election work is taking place within the framework of a reconfigured Alliance process which Alliance components agreed is necessary and committed to work together to realise. Already four discussion papers have been produced and discussed by the Alliance components. The Alliance tasked its Secretariat to produce a common Alliance position paper based on the outcomes of the discussion held. The work is presently under way. In addition, there was an Alliance consultative process in the manifesto drafting and electoral list consolidation processes.

While expressing support for the investment drive led by President Cyril Ramaphosa within the framework of government and ANC election manifesto commitments, the Central Committee attached great importance to ensuring that more investment is directed into the productive sector of the economy to create jobs and decent work. Related to this, the SACP further supports the ANC election manifesto commitments on an industrial plan to support localisation, innovation and broadening ownership of the economy. The importance particularly of developing social ownership, including community and worker co-operatives, cannot be overemphasised. This is crucial also in the sphere of cleaner and renewable energy production to support Eskom as part and parcel of forging a just transition.

The crises of social reproduction and local government

The Central Committee deliberated on the crisis of social reproduction, the processes and structures through which class, race and gender inequalities are systematically sustained generation after generation and engender other social problems. Globally and domestically, the pressure of capitalist private wealth accumulation and its neo-liberal policy regimes decrease workers’ collective share of income and resource allocation to the daily sustenance of labour, and of the working class and rural poor. Related to this, the crisis of social reproduction is evidenced in the consequent social problems that we see taking place in our communities. These include unsustainable individual and household debt levels, domestic and gender-based violence, increased prevalence of substance abuse and criminality, racism rearing its ugly head and backward reactions, among others tribalism or ethnicity, as well as susceptibility to exploitation by the abusers of religion.

In the coming period the SACP will intensify its Know and Act in Your Neighbourhood Campaign to mobilise communities both in confronting the crisis of social reproduction and deepening the Red October Campaign theme to resolve the challenges of local government.

The Central Committee reaffirmed its stance against gender-based violence, and the importance of organisations throughout our society taking disciplinary steps in relation to any such allegations. The Central Committee however warned against the apparent use of allegations of gender-based violence in factional leadership battles. Nothing should undermine the seriousness of sexual harassment, rape, domestic violence as a violation of women’s fundamental human rights.

As we prepare for International Working Women’s Day on 8 March, the SACP reasserts our commitment to the protection of the rights of women workers, the commitment to build a socialist future in which the social needs of women and in particular of working class and poor women are placed centrally.  The SACP has joined the South African campaign to defend our sports heroine, Caster Semenya, a woman leader of note, an athlete who has achieved a lot, from the imperialist sports administrators’ campaign against women athletes from our continent, which smacks of the abuse of Saartjie Baartman in years gone by. 

International solidarity

The Central Committee strongly condemned the United States-led imperialist agenda of seeking to undemocratically change government in Venezuela and impose an unelected individual as the “self-proclaimed” interim president. The SACP recognises the elected President of Venezuela, Nicolas Maduro, and the government of the Bolivarian Republic he leads. The Party expresses its solidarity with the just Bolivarian revolution and the people of Venezuela. The SACP will continue to form part of millions of people across the world opposed to the machination of imperialism in Venezuela, Nicaragua and Cuba, and will intensify its active expression of solidarity.

Condolences to Dorothy Masuka family and the arts fraternity

The Central Committee learnt of the death of the iconic musician Dorothy Masuka on Saturday, 23 February 2019. The SACP expresses its deepest condolences to the family and relatives of Masuka for the loss encountered. Dorothy Masuka contributed to the struggle against apartheid and for democracy in South Africa through her activist music. The arts fraternity and the country as a whole share in the loss encountered by the Masuka family.

Statement issued by the SACP, 24 February 2019