Hon Deputy Speaker, hon Deputy President, hon Ministers and Deputy Ministers, hon Members, fellow South Africans, ladies and gentlemen, the ANC supports the Special Appropriation Bill B10 2019 Reprint hereafter referred to as the Bill.
The Bill was tabled in Parliament by the Minister of Finance on 23 July 2019. The Bill is aimed at assisting Eskom with its illiquidity problems especially towards its obligations to repay debt and interest. The Bill proposes an additional R26 billon at the current
financial year and R33 billion in the 2020/21 financial year.
Let me say upfront that the Bill is in compliance with the Money Bills Amendments Procedure and Related Matters Act of 2009 as amended hereafter referred to as the Money Bills Act. Central to the Money Bills Act is the requirement for public participation in drafting this very important law, in line with the wishes of the people who gathered in Kliptown in 1955 and declared for the whole world to know that:" The people shall govern". Indeed our people through their organised formations and individual participation made their voices heard as reflected in the report that was table in this House.
As the standing committee on appropriations, we would like to thank them for taking interest on matters that affect their lives. We would like to encourage more to do so in the future to keep our participatory democracy alive.
Hon members, the President of the Republic of South Africa, His Excellency Cyril Ramaphosa, in his paper to
the nation yesterday aptly capture the importance of Eskom when he argued that, I quote:
"The cost to our economy of power outages is significant; it contributes to investor unease at a time when we are trying to attract more domestic and foreign capital to South Africa and to improve our global rankings on ease of doing business"
Eskom is not just too big to fail, it also too important to fail. Eskom provides over 90% of electricity consumed in our country. It is thus for all intense and purposes a natural monopoly. If it fails, we have no alternative. Also, the socio economic importance of electricity utility cannot be over emphasised, it has played an important role in dealing with these apartheid legacy where more than 60%of our people did not have access to electricity.
This basic necessity of life was made a privilege of the chosen few who unfortunately were chosen on the basis of their skin colour. The majority of members in this House can attest to that reality of being born and raised in a
situation of permanent load shedding. Majority of people in this House come from families where their parents or they themselves had to study through a candle light where some see a candle as a sign of romance, the majority of us see it as a sign of deprivation.
Thanks to Nelson Mandela's ANC that today through Eskom, over 84%of South Africans have access to electricity compared to 36% in 1994. Reliable supply of electricity is important for economic growth. It has been said by many economists, business people, workers and politicians that there cannot be any meaningful economic growth without secure and reliable supply of electricity. The stuttering economy and high levels of unemployment cannot be solved without solving electricity problems of our country. The greasing effect of electricity is thus beyond dispute.
I'm happy that we agree in the committee as the adopted report proves that recapitalization of Eskom should happen, therefore supporting the Bill. It is also agreed that Eskom cannot be allowed to default; this will result in cross defaults which may prompt the lenders of capital
to recall their money. This will include the money guaranteed by government needless to say, that situation cannot be allowed because of its dark consequences on the sovereign debt and sustainability of fiscas.
Although this creates the moral hazard and time inconsistency problem for Eskom to know that government will always come to its rescue, we feel the Bill should be supported. This cannot be a blank cheque.
We agree fully with the financial fiscal commission that this should go with stringed conditions. More about this will be said later by my comrades. However, what we are stressing is that financial support is one of the main interventions necessary to take Eskom to viability and sustainability. We are also arguing that financial assistance from government is not and should not be seen as a panacea of Eskom's wounds. Related to this assistance is the undertaking that Eskom on its own goes to the capital markets and raises a further R46 billion.
While we agree that many of the problems that Eskom is facing today could have been avoided, the fact of the
matter is that Eskom infrastructure is old averaging 37 years. This should raise a red flag for other infrastructure like water infrastructure where you are told that some of the pipes are facing similar problems. Pressure of the infrastructure of our country is huge. We therefore welcome the budget of R864,9 billion over the Medium Term Framework, MTF. We would also like to add that expansion of infrastructure should be accompanied by maintenance budget.
We would also like to congratulate Minister Gwede Mantashe and Cabinet for unveiling the Integrated Resource Plan, IRP 2019 in particular his assertion that I quote:
"Coal will continue to play a significant role in electricity generation as the country has resource in abundance "
Hon Minister Mantashe, the financial markets responded positively to release of IRP 2019. This should be done with due consideration of internationally accepted minimum emission standards over time.
The committee also agrees with Cosatu that the Minister of Public Enterprises should move with lightning speed to strengthen the board of directors and stabilise management. This, you will do by adding necessary skills on to the board and appointing the Chief Executive Officer, CEO, and other executives. Management science is crystal clear that for organisations in transition and facing the challenges, stability is a prerequisite.
Investors and all stakeholders remain doubtful about the sustainability of a company if no such stability is obtained. If Eskom fails contractors and other suppliers of goods and services to Eskom fail, management will also feel the heat, workers also lose; this then beholds some all of us to play our part. We have learned with utter dismay and disbelief that there are coal suppliers whom for whatever reason are making super profits at Eskom.
We are reliably told that some these companies are making profits of up to 50%, 70% and up to 100% while there may be binding agreements, we urge the oard and the Minister to renegotiate these contract and report back to Parliament.
It will be difficult to justify subsidisation of super profits through this Special Appropriations to the people of South Africa. Government is leading the way and we therefore expect everyone who cares about Eskom and the economy of this country to play his/her part.
It's only when we have unity of purpose that the future of Eskom can be guaranteed. The committee received submission from Alternative Information Development Centre, AIDC, who proposed that Eskom should look for other different creative ways of funding.
The over reliance on government is unsustainable, they argued. This is in line with the debate in this House about the need of government to look at prescribed assets as another source of funding. Obviously, this should be done with utmost care with necessary cheques and balances. For Eskom and perhaps for other SOC's worker representations to the board must be considered. This will also help with dealing the trust deficit between the board and management on one hand and labour on the other.
Ultimately, we called on all people to pay for the usage of electricity to ensure that we have electricity for the following day. We urge community leaders to engage and ensure that this problem is equitably solved. We can no longer justify the non payment of services, we owe that to posterity. At the same time, it is important that municipalities also perfect their billing systems. The paper on the new look of Eskom will assist in understanding its future.
The Minister of Public Enterprises assured the committee that the President will soon be unveiling it. We are delighted that the President has undertaken to release the special paper on Eskom, a blue print of turning Eskom around soon. With such interventions, we have no doubt that we will be on a sustainable path to Eskom recovery. The ANC supports this Special Appropriation Bill. Thank you.