Eskom, NUM On Collision Course Over Unbundling

Despite substantial political support for restructuring at Eskom, it appears as if the power utility is on a collision course with the National Union of Mineworkers over its plans to unbundle.

This follows a discussion between Eskom management and unions over its recently-drafted turnaround strategy document.

NUM has always been openly opposed to unbundling, and has previously said it needed to be convinced that it would be good for Eskom. And while NUM must still take the plan back to its members, now that the plan is in black-and-white, the union appears less convinced than ever.

Last Thursday, Eskom chairperson and acting CEO Jabu Mabuza met with Eskom executives and presented the much-awaited turnaround plan.

It outlines a roadmap for the unbundling of Eskom into three entities, explains how this will work and how long it will take.

The following day, Mabuza sat down with NUM, the National Union of Metalworkers SA, and Solidarity, to discuss the same plan. Eskom issued a statement after that meeting which did not indicate any hostilities.

In the statement, Mabuza said he hoped the meeting would provide “fertile ground” for future engagements.

“We took the unions through Eskom’s turnaround strategy and agreed that further discussions would take place as we plan and move forward as a collective.

“If there is one thing I want to have accomplished when I leave this post in the next 10 weeks, is to have created an environment where Eskom and unions are able to have more frank and robust discussions about the future of Eskom,” Mabuza said.
Mashego said the Friday meeting ended two hours early, because “We said, ‘what are you talking about here?'”

Eskom management had taken a “straitjacket approach”, Mashego said, adding that the power utility had left no room for negotiations on unbundling.

“Eskom has violated consultation processes. You can’t come to the unions with a conclusion,” he said.

No to unbundling

Mashego said the union was not opposed to “engaging” with the document. But he said Eskom had yet to present a convincing case as to how unbundling would save it.

“Our members are clear: no to unbundling,” Mashego said.

NUM’s approach sets it firmly in opposition to Mabuza, Ramaphosa and Public Enterprises Pravin Gordhan – all of whom have punted the unbundling of Eskom.

An economic strategy discussion document released by the National Treasury this week also said, “an independent transmission company, to be created from the unbundling of Eskom, should buy electricity transparently from independent power producers.”

The Treasury warned that “[p]ursuit of the existing model will lead to excess capacity, higher electricity prices, and falling relative costs of off-grid technologies, which will result in a vicious cycle of rising electricity prices.”

Mineral Resources and Energy Minister Gwede Mantashe previously told Bloomberg TV that the unions would get behind the unbundling plan, and that their opposition to it now was just a case of unions representing the interests of their members.

Given the political heft behind the unbundling plan, it seems unlikely that NUM’s protestations will be able to stop it from going ahead.

But it has achieved the seemingly impossible in the past. In June 2018, workers all but switched off the lights when Eskom offered them a 0% wage increase to cut costs.

Eskom’s debt is north of R400bn and it relies on government bailouts to keep operating.

Gordhan intervened and the 0% offer was taken off the table.

Ramaphosa has also given assurances to the unions that there will be no job cuts as Eskom unbundles.

NUM wants the Eskom board to be fired; “consequence management” for those responsible for mismanagement, and says restructuring will have little impact if “corrupt looters” are still employed there.

Numsa has yet to formally respond to Eskom’s turnaround plan, but will do so soon, spokesperson Phakamile Hlubi Majola told Fin24.

The third union at Eskom, Solidarity, was not immediately available for comment on Thursday.

Eskom referred Fin24 to its earlier statement.
‘Trying to co-opt us’

But that was not how majority union NUM’s representatives read the room.

“We said (to Mabuza), ‘you are violating consultation processes by trying to co-opt us’,” NUM’s energy sector coordinator, Paris Mashego, told Fin24.

The union undertook to take the turnaround strategy back to its members, and Mashego said there would be a NUM meeting in the first week of September to discuss it.

But NUM’s opposition to unbundling is unlikely to change.