By Paul Burkhardt
(Bloomberg) – South African labour union Solidarity began a legal process to block plans to use the state pension fund to help debt-stricken power utility Eskom.
The action adds to opposition from other employee groups resisting a proposal by the Congress of South African Trade Unions, the nation’s biggest labour organisation, to cut Eskom’s debt by R254bn ($17.2bn). Cosatu had expected to reach a pact with business on the idea before President Cyril Ramaphosa presents his state-of-the-nation address on Thursday, but has pushed back that timeline.
Solidarity said it wrote to the Government Employees Pension Fund and the Public Investment Corporation, which manages the fund, demanding that they reject the Cosatu plan.
“If Solidarity does not receive such a guarantee, or if a decision is made to implement the controversial Eskom plan, Solidarity will take further legal action, which may include urgent legal assistance,” the labour union said in a statement.
Eskom’s inability to provide sufficient power is hindering growth in Africa’s most-industrialised economy. The loss-making business has R454bn of debt and is relying on government bailouts to make interest payments.
Earlier this week, the Federation of Unions of South Africa, which counts public servants among its more than 515,000 members, rejected the Cosatu plan and called for Eskom to be placed under a local form of bankruptcy protection. Cosatu has about 1.8 million members, while Solidarity has 140,000.
