Government Employees Pension Fund (GEPF) principal executive officer Abel Sithole was careful on Wednesday not to jump the gun when asked, repeatedly, by MPs about the Eskom bailout.

No-one had come to talk about the pension fund and until there was a firm proposal it would be difficult to say anything definitive.

“The reason we can’t categorically say we will not consider it, it may well be that an approach is made that is perfectly reasonable. It may well be that a very good deal is presented to the GEPF,” said Sithole.

“It might be untoward of the GEPF to dismiss it outright. If it would benefit the GEPF, we would not be doing our work if we do not consider it.”

The GEPF has an eye for making a good deal at Eskom. It’s on public record it made R30-million in interest in early 2018 after, controversially, agreeing to a R5-billion one-month bridging facility through the PIC.

But the Eskom bailout proposal is not as straightforward as it may at first seem.

The GEPF already holds R84-billion of Eskom debt through the Public Investment Corporation (PIC), where the pension fund holds more than 86% of the government asset managers’ R2.1-trillion assets under management — R1.82-trillion 

Taking on R250-billion of Eskom’s R450-billion debt would raise exposure to R334-billion – effectively 18% of managed assets.

“From a prudential investment perspective it may not be wise to hold that much,” Sithole told Parliament’s finance committee, adding the GEPF only ever held such levels in a single entity at Naspers:

“We bought about 25%”.

Afterwards, DA MP Geordin Hill-Lewis told Daily Maverick:

“This is the closest the GEPF has come to giving a firm view on the proposal.”

Hill-Lewis has been banging a drum against the GEPF, through the PIC, taking on Eskom debt. Most recently at Tuesday’s parliamentary debate on the State of the Nation Address (SONA):

“Civil servants work hard and save hard for their retirement. That money is theirs. It came from their paycheques. It doesn’t belong to Cosatu, and it can not be commandeered to pay for the ANC’s mismanagement and corruption.”

Trade union federation Cosatu has made its proposal for the PIC to take on R250-billion of Eskom’s R450-billion debt on the argument that if Eskom collapses, there’s nothing left. Conditions range from no job losses, no retrenchments, reskilling and redeployment of workers under a just transition to decisive action against corruption and prosecution of wrongdoers.

That the discussions at the National Economic Development and Labour Council (Nedlac) continued for several days in early February is a sign it was being taken seriously by the government, labour and business.

In his SONA speech, President Cyril Ramaphosa upheld these discussions with the aim of finalising an Eskom finance agreement as a positive example of social compacting:

“The social partners – trade unions, business, community and government – are committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner.”

A key question would be who would actually take the Cosatu-originated proposal to the PIC – and GEPF – to start the process of due diligence, risk assessment and decision-making. That in itself may be telling.

There may be some clarity when Finance Minister Tito Mboweni presents the 2020 Budget on 26 February.

And Mboweni on that day may also have to answer on SAA.

On Wednesday, Public Enterprises Minister Pravin Gordhan signalled the national flag carrier may be looking for additional financing.

“When the minister (of finance) presents his Budget, we’ll see where the intentions of the Treasury are. That’s still being worked on,” Gordhan told Parliament’s public spending watchdog, the Standing Committee on Public Accounts (Scopa).

After SAA went into business rescue on 6 December 2019, commercial lenders made R2-billion available and the government-owned development financier, the Development Bank of Southern Africa (DBSA), followed with R3.5-billion.

DA MP Alf Lees pushed for answers to how long this cash injection would last. Gordhan confirmed the R2-billion had been used up by the end of January 2020, with the R3.5-billion expected to last to early March. The DBSA is expecting its billions back by mid-2020.

“The ANC putting the vanity SAA project into business rescue was clearly a move to keep creditors and liquidation risks at bay and was never intended as a true handover of authority to (business rescue practitioners) Les Matuson and Siviwe Dongwana,” Lees said in a statement.

While both Matuson and Dongwana sat through the Scopa meeting, they did not answer questions, as right at the start Gordhan indicated that the details of the business rescue plan, to be tabled at the end of February 2020 are sensitive, and still work in progress.

Behind the scenes, a fight is underway over the extent of cutbacks and restructuring. When in early February 2020 the business rescue practitioners announced wide-ranging cuts to routes and job losses, there was pushback from trade unions and politicians.

And while the business practitioners issued a statement saying their decisions had been “in the best interest” of SAA to make the airline sustainable, Gordhan countered this in a statement to say government would make representations which included “that the route network changes announced by the business rescue practitioners be reviewed to ensure the sustainability of the airline”.

At Wednesday’s Scopa meeting it emerged government is asserting the right of final approval of key aspects of the business rescue process because of the applicability of two laws.

Traditionally, business rescue unfolds under the Companies Act, with business rescue practitioners accounting to the courts. But SAA, as one of the state-owned entities (SOEs), also falls under the Public Finance Management Act (PFMA) which means the government, as the shareholder, remains in charge.

The timeframes are tight: with business rescue practitioners having undertaken to finalise their plans by the end of this month, a meeting of creditors must be held within 10 days to discuss the plans and to also vote. The money to keep SAA in the air runs out in early March 2020.

Exactly how the SAA business rescue, the first of an SOE, will unfold remains to be seen. This comes as questions hang over the financial dark hole that is Eskom.

But the Budget 2020 will show how much taxpayers will have to continue to support dysfunctional SOEs such as SAA and Eskom. DM