U.S. Markets open in 15 mins

Cosatu Wants Workers to Have $6.9 Billion Stake in Eskom

Antony Sguazzin

(Bloomberg) -- Sign up to our Next Africa newsletter and follow Bloomberg Africa on Twitter

The Congress of South African Trade Unions, the country’s biggest labor federation and a key ally of the ruling party, said it wants the 104 billion rand ($6.9 billion) of Eskom Holdings SOC Ltd.’s debt held by the state pension fund manager to be converted into equity owned by workers.

The proposal, made in an opinion piece in Business Day newspaper by Cosatu’s General Secretary Bheki Ntshalintshali, is part of a deal the labor federation is trying to reach with business and government to rescue Eskom. The utility can’t supply sufficient power to the country and has 454 billion rand in debt.

“This will result in workers becoming shareholders in the power utility,” he said, without giving further details.

Eskom is seen as key to South Africa’s economic performance and the country’s ability to hold onto its last investment grade credit rating. Regular power cuts are hindering output in Africa’s most industrialized economy.

Ntshalintshali also recommended that at least 10% of all pension funds, whether private or government owned, be invested in government bonds geared toward social investment and employment creation.

“Workers believe that their retirement funds can contribute toward economic growth, socially desirable investments and employment creation,” he said.

The raising of the possibility of so-called prescribed assets is likely to anger investors who are opposed to having their investments dictated by government.

To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Rene Vollgraaff, Sara Marley

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.