President Cyril Ramaphosa says he is still pursuing a controversial plan which will see government pension funds used to reduce Eskom’s debt.
He was responding to questions from journalists at a briefing at Parliament on Friday afternoon.
Eskom - which has debt in the region of R380 billion that it is unable to service - has relied on National Treasury for the past three years to pay a large part of its debt service costs. But for as long as Eskom’s quantum of debt remains so high, the company will be unable to borrow to make new investments in energy capacity.
READ | Downsize Eskom debt, IMF urges government
The ability to borrow is important as large, new investments must be made in the transmission grid to enable new renewable projects to come on stream.
Said Ramaphosa:
Ramaphosa referred to a proposal made by Cosatu a year or two ago in the National Economic and Development Council (Nedlac), which suggested that the Government Employees' Pension Fund (GEPF) convert debt it holds in Eskom to an ownership or equity stake. This proposal caused alarm among members of the GEPF, who were concerned it could endanger their savings. The management of the GEPF has in the past been reluctant to embrace the proposal.
"This matter has been in discussion at GEPF level and it is a matter that can still be taken forward. I do not see it as a measure that could collapse government pension funds as these are long-term funds and not everybody retires at the same time. This proposal is still on the table," he said.
Get the biggest business stories emailed to you every weekday.
Go to the Fin24 front page.