Financiers won't be destroyed while trying to save Eskom, vows business body
Business Unity South Africa vice president, Martin Kingston, told Fin24 on Friday that while the business body was party to a principle agreement to mobilise private and public savings to assist Eskom, financial organisations should not be exposed to excessive risk in the process.
The Congress of South African Trade Unions told Fin24 on Friday morning that the labour federation’s proposal was accepted, in principle, by government and business formations, in an arrangement that would canvass both public and private funders to help Eskom. This followed talks held at a high-level National Economic Development and Labour Council (Nedlac) meeting this week.
On Wednesday Reuters reported that President Cyril Ramaphosa is "favourably disposed" to Cosatu's proposal that aims to see the Public Investment Corporation, the Industrial Development Corporation, the Development Bank of Southern Africa and private funders assist Eskom in tackling its R450bn debt burden.
Kingston told Fin24 that BUSA - which represents businesses at Nedlac - was in discussions with government and organised labour on a framework that would see Eskom given the resources and assistance needed to continue generating power.
Won't expect funders to take 'unnecessary risk'
"It must be put in context. We are still working on the framework agreement and we hope that we can conclude that soon. Alongside identifying the operational and structural challenges, we need to address the debt on the balance sheet and future financial obligations," said Kingston.
Kingston said while entities like the PIC, the DBSA and the IDC were mentioned as possible partners in the framework, it had been agreed that funders would not be asked to deviate from their mandate.
"Subject to preserving the integrity of the financial services sector, we should mobilise resources domestically and internationally to assist the entity. We will not ask institutions to deviate from their existing mandates or unnecessarily expose themselves to risk," Kingston said.
He said it was essential to preserve the regulatory requirements of entities of the country and avoid diminishing the value for shareholders and depositors.
"We must adopt a prudent approach of high quality and if we undermine that, we will alienate both current and future funders and capital providers.
"We expect to continue discussing this with labour and government on Monday and Wednesday to discuss the framework and other details. We would hope that soon we will have an agreement, but framework agreements are just that," he said.
Martin said BUSA hoped to have a framework established and agreed upon before Ramaphosa delivers his State on Nation Address next week.
Spokesperson for the Presidency, Khusela Diko, referred Fin24’s questions to Nedlac.