NUMSA statement on the ongoing dispute at Eskom

The National Union of Metalworkers of South Africa (NUMSA) wants to applaud the united stance taken by workers at Eskom from NUMSA, NUM and Solidarity supported by their national leadership to stand together in defending their hard won gains. Together we are united in rejecting Eskom’s provocative zero % offer and the decision not to improve their wages. We are inspired by the resolve of workers to stand together in demanding a living wage I and we applaud it.

NUMSA noted that after the historic revolutionary press conference addressed by the national leadership of both NUMSA and NUM, where Solidarity was also invited, Eskom management could not resist and convened a very clumsy press conference thatcompletely missed the boat in terms of understanding what are the real issues that make trade unions to collectively stand together in demanding that workers should be denied their deserved wage increases. These issues go beyond workers’ wages. Their ultimate outcome will be to destroy Eskom as a public utility, and they are both an issue to our demand that Eskom must give workers their deserved increases. Secondly, if they are not tackled properly, the future of Eskom as a public utility remain bleak. These issues are broken down as follows:

  1. The primary energy costs in relation to them being used by Eskom management as a justification as to why workers cannot be given an increase.
  2. The connection of IPPs onto the national grid is another hole that is destroying Eskom.
  3. A bloated top-heavy executive structure.

Here below is the NUMSA argument in relation to the false, cheap argument used by the current Eskom management in trying to use the primary energy costs as a reason why they cannot afford to improve workers’ wages. NUMSA want to submit, argue and reject this cheap argument advanced by Mr Phakamani Hadebe. And here is our argument: Since FY2008 to FY2015 the average cost per ton of coal purchased by ESKOM increased on average by 17% year-on-year.

During this period, NUMSA and other unions raised the failure of Eskom management to manage its cost plus mines and also rejected the related and escalating coal costs. We made a clarion call that Eskom coal plus mines should be supplying Eskom with cheap and good quality coal instead of enriching capitalist who run Eskom mines and who used these mines before the global commodity crisis in 2008 to maximise profits for themselves out of Eskom coal contracts and out of export coal exporting contracts. During this period when NUMSA and other unions were being  ignored by Eskom management, some Eskom Board members sat on the Boards of cost plus mines. That is why they refused to listen to NUMSA.

The very same executives who allowed the exorbitant coal cost increases of 17% year on year, paid themselves huge bonuses whilst ordinary workers continued to suffer.  This very same picture we are painting here was used to motivate why Eskom workers should not get an increase or inflationary related increases only.

Between 2016 and 2017, the period characterised by those who run Eskom today as a period of state capture, the coal costs increased by a below inflation figure of 3.5% year on year. What NUMSA rejects with the contempt it deserves is for the current Board and current management to treat all Eskom workers as idiots who cannot think in that when the cost of coal has come within 3.5%, that is when they want to advance a false argument that workers at Eskom do not deserve an increase.  For about 7 years, from FY2008 to FY2015, these very same managers allowed Eskom, year-on-year, to be charged 17% and still have the audacity to pay themselves bonuses.

This is why we reject that the very same culprit of Eskom management can have guts to tell workers to accept no increase against the following backdrop:

The increase of 17% year-on-year between FY2008 and FY2015 reflects gross mismanagement and/or a corrupt transaction on the side of Eskom and it has resulted in the decline of  electricity sales from 224 Terawatt-hours to 216 Terawatt-hours in the same period.

The coal burnt also reduced from 125 Million tons in FY2008 to 119 Million tons in FY2015. Our members did not benefit from an excellent performance that lead to a 3.5% year-on-year increase in coal purchases in FY2017, but management raked in huge bonuses out of an embarrassing performance that lead to the average increases of 17% year-on-year increases between FY2008 and FY2015. It is therefore our submission as NUMSA that workers at Eskom who are represented by unions deserve an increase and if they cannot be given an increase when the primary coal cost is at 3.5 % then they will never be given any increase. In fact, what is being advanced by Eskom management and the Eskom Board is austerity measures and the implementation of conservative, right-wing policies of the IMF, World Bank and ratings agencies. These institutions are not just anti-workers, but their entire agenda working with soldiers in the field, both in the Eskom Board and Eskom management, is to prepare the grounds for the privatisation of Eskom. This is something NUMSA rejects with the contempt it deserves. This so-called zero % increase NUMSA understands is a wage-freeze, which is anti-worker and Thatcherism at its best. That is why we remain resolute that workers must be given their deserved wage increases.

NUMSA and the NUM in the recent past put the record straight on the propaganda from all right-wing corners such as Mike Schussler the so-called Economist. He deliberately mislead the public that Eskom workers are an expensive aristocracy. This we want to be on record has absolutely no basis. It’s a lie and propaganda thumb suck designed to skirt the real issues. The elephant in the room constitutes another hole that has got the potential to bankrupt Eskom. It is not ordinary workers, it is the top-heavy structure of the Eskom Executive management team, who are the very champions of belt tightening for workers who are advocating retrenchment because they are trying to make themselves relevant. In fact it should be the very same top executives who should be targeted for job cuts. When Eskom was the global energy utility of the year in 2001, it had 80 top executes and today they are over 500 with less sales. This is a recipe for disaster and has led to the current average cost of these top executives whose average annual income starts from R800 000 and above.

We have noted the statements by Mr Phakamani Hadebe at the press conference of 13 June 2018 that the REIPP are not a problem and are only costing Eskom 23Billion in this financial year. We find this ridiculous given that Eskom’s own calculations pointed to the magnitude of REIPP costs, which will increase each year as more renewables become operational, whilst surplus capacity exists. The Eskom calculations which assumed surplus capacity until 2021, pointed to the cumulative “school fees” of over R100billion for implementing the REIPPP and we are convinced that our members are paying this.

NUMSA, unless it is proven differently, is completely angered and irritated by the current board of Eskom which supported the minister of energy in the signing of the 27 REIPP agreements. It was not just reckless, both the board and the current CEO acted against the interest of Eskom and we stand to be corrected but it is our honest humble view that they acted outside their fiduciary duties. In fact to be honest their actions make it very hard to believe that they carry the interests of Eskom as we know it. You cannot stop to have a feeling that the current board and the current CEO are the deployees of IPP’s and their overall objective is to privatize Eskom and hand it over to private pockets.

NUMSA, NUM and Solidarity national leadership yesterday co-ordinated and convened a meeting with the board and CEO, and the meeting was confirmed that it must resume at 4pm on Thursday at Megawatt park. On our arrival and when the meeting was supposed to start Phakamani Hadebe approached the union delegations to communicate to the unions that for the next hour the very same Eskom board deliberated whether it is appropriate for the entire board to meet with the unions and whether it will not be conflicted because we sent them detailed issues which we wanted to debate with them, such as the signing of the IPP’s . Here are some of the issues which we wanted to confront them with:

  1. We wanted to ask the board of Eskom how has the signing the IPP’s onto the national grid advancing the interest of Eskom, when in fact such a decision is destroying Eskom sales and Eskoms market? In that the capacity we have from our base load generated from Medupi and Kusile, we can produce a kilowatt from 42cents. Whilst the IPP’s are busy defending the costing of R2, 14 per kilo watt hour, paid through Eskom generated revenue, but when Eskom is selling the energy generated by the IPP’s, it sells at loss of about 83c and, as a result in 2016 Eskom sold electricity at a loss which cost Eskom between R9 and R16 billion.
  2. The contracts of the IPP’s which have been signed by the minister of Energy and the current board are governed by the principle that IPP generated energy must take priority once it lands into the national grid. It must be sold first before energy that is generated from coal         . Clearly this policy is against Eskom’s own interests. In fact Eskom’s market in the hands of the current board and CEO is handed over to the IPPs. Basically Eskom has just been turned into a marketing platform of energy for the IPP’s. The fundamental question remains how is this decision of the board to support the minister of energy, to sign on IPP’s – is in the best interests of Eskom? Bearing in mind that around 4:00 the IPP’sswitch off and the coal power stations have to kick in. The amount of energy required to ramp up the power stations to replace the IPP’s, is so intense, that it creates huge levels of emissions, effectively undermining the purpose of the IPP’s which is to reduce the harmful emissions created by fossil fuels. This raises doubts about the justification of having the IPP project if its existence undermines the goal of reducing harmful emissions caused by fossil fuels.
  3. Both the board and the minister of energy, their actions are not just bankrupting Eskom in placing it in a position where it must have difficulties in giving workers increases, but in terms of backward and forward linkages in the economy, but about 92000 jobs in Mpumalanga will be affected, and 6000 direct Eskom jobs. The question is whose class interests is the board and the CEO of Eskom advancing?

NUMSA remains very resolute that unless the current board and the minister of Energy act  in the interest of Eskom to remove the IPP’s from the national grid, to stop their now open and now hidden agenda to privatize Eskom to resolve the current dispute in the best interest of workers NUMSA will be left with no option but to call on the other unions that it is now time that we must take a campaign not just to improve workers’ wages, but to demand that the current board, and the current CEO must be removed from their position. And we know that the success of this decision depends on the unity of all workers at Eskom and the unions which is NUM, NUMSA, and Solidarity.

Our view as NUMSA is influenced by the provocative arrogant decision taken by the current board that refused to meet in the national leadership of the three unions and such a decision can only mean one thing. That they are not prepared to be confronted and to debate with the unions over their reckless decisions whose essence is to wipe out the jobs of workers. This is the same level of arrogance that Jeff Radebe demonstrated when he signed IPP’s without consultation. NUMSA is of the view that it is time we call a spade a spade.

NUMSA notes and rejects the unilateral decision that Eskom has announced that to resolve the current dispute they will simply impose an arbitration process onto the current dispute. And to put the record straight such a decision has been made without consulting unions and as such it is rejected by NUMSA. And NUMSA, NUM and solidarity have unanimously agreed to do a referral of a dispute of interest which should be conciliated. We have not been consulted on any arbitration process and we regard this open unilateralism as nothing less than the old union bashing attitude. And we regard it for what it is, adversarial, and it will be opposed and defeated.

NUMSA and all other unions, to deal with the current stalemate at Eskom have elected to do a referral of a dispute of interest to CCMA. We expect like any other dispute that this dispute will be conciliated and a certificate of non-resolution should be issued. In case a settlement is not reached, and all our organisational rights are reserved.

NUMSA wants to thank all workers for their militant discipline and we are making a clarion call that workers at Eskom and all three unions, must remain united and resolute behind workers’ demands. United we stand! Divided we fall!

Aluta continua!

Issued by Irvin Jim

NUMSA General Secretary

For more information please contact:

Phakamile Hlubi-Majola

NUMSA National Spokesperson