OK, right now we’re screwed. The government is stuck. It has no idea. On Wednesday finance minister Tito Mboweni revealed in his medium-term budget policy statement (MTBPS) that he has absolutely no idea of the size or structure of the debt relief programme Eskom needs.
For more than a year the answer to how to deal with Eskom’s debt has been the single thing the economy and the markets and the people we borrow money from have wanted to hear. We have been promised the answer dozens of times. Wednesday was delivery day.
He had just one job, yet all Mboweni could manage was “once I am convinced that the Eskom board and management has made an irrevocable commitment to implement the government’s decisions [these were to run plant better, better cash management and quickly break up into three divisions, hardly difficult] and there is enough progress, we will negotiate the appropriate size of debt relief”.
What he actually means is that once the government has got the unions at Eskom to agree to his conditions he will talk about debt relief
Or on our fiscal position? “That said, if we want to achieve our target (a fiscal primary balance by 2022/23, excluding Eskom bailouts) we will need to find additional measures in excess of R150bn over the next three years, or about R50bn a year,” he said. “How will we do this?” Wait for it ...
“We look forward to robust discussions in the relevant bargaining structures and with other stakeholders to achieve a sustainable arrangement.”
What he actually means is that once the government has got the unions at Eskom to agree to his conditions he will talk about debt relief. The same with civil servants. But the government is terrified of the unions at Eskom and in the wider public sector, which in turn means they will never have to come to any “arrangements” or actually solve Eskom’s debt crisis.
Moody’s, the only ratings agency still ranking our sovereign bonds worthy of investment, is due to update its SA outlook on Friday. There is nothing Mboweni said, or in what public enterprises minister Pravin Gordhan said in his Eskom white paper on Tuesday, that would persuade Moody’s to hold its outlook on our debt at its current “stable”.
LISTEN | 2019 Medium-term budget policy statement highlights
President Cyril Ramaphosa and his kitchen cabinet have had all the time in the world to get this right and they’ve blown it. Not even naming a decent CEO for Eskom next week (why the wait? — the unions, of course) will claw this opportunity back.
Fortunately, we do not all lack courage. A member of the board of Eskom, Busisiwe Mavuso, also the current CEO at Business Leadership SA, told a parliamentary committee on Tuesday that political interference by the state in the affairs of Eskom was preventing the board from doing its job. It was clear she had Gordhan in mind.
‘Honest conversation’
This had been a long time coming. “If we were given the latitude to actually make decisions without political interference as this board,” she said, “I’ll tell you what we’d do. We’d actually go to South Africans and say we need to load-shed at least for the next eight months — and I’m saying that understanding that load-shedding for one day costs the economy R2bn — but that would be the honest conversation.”
Gordhan, fresh from reports that he had interrupted the appointment by the board of a new CEO at Mango airline to put his own man in charge, was quick to respond. “I think she has to be careful of what she says as a board member,” he told a radio station, “because she is part of a collective decision-making process and accounts to the shareholder, which is government at the end of the day. We all have to make difficult decisions and one of the difficult decisions is whether we fire 16,000 people or not, and a government that is responsible will not fire 16,000 people”.
It shouldn’t have to. A responsible government would not have sanctioned Eskom’s levels of overstaffing in the first place. Much of it occurred while Gordhan was finance minister and signing the cheques.
Gordhan and Mboweni’s interventions this week were opportunities wasted. The country is in agony and they had nothing apart from a few fine words — “our problem is that we spend more than we earn. It is as simple as that”, said Mboweni, and Gordhan offered “the deterioration of Eskom over the past 10 years has resulted in acute skills and capacity erosion … it will take many years of substantial effort to rebuild”. Can kicked.
If anything they hold the country to ransom. We can complain about having to support SAA or Eskom, but actually touch them and you start a debt chain reaction that closes the country down. It may be time to test this.
Reports suggest a group of creditors is trying to close SA Express down. Let’s see. Gordhan recently managed to stop trade union Solidarity from taking legal action against SAA because SAA’s very existence is a threat to the pensions of Solidarity’s members. Which it clearly is.
It is just that on the other end of the rope in this tug of war is Gordhan, pulling not so much for jobs but for a deep and immovable ideological attachment to the notion that the state can run companies. It is an intellectual conceit that is being sustained at a terrible price.
• Bruce is a former editor of Business Day and the Financial Mail.
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