COSATU; NUM; NUMSA PRESS STATEMENT ON THE ESKOM AMENDMENT BILL TO BE PASSED IN PARLIAMENT. 11 June 1998 We wish to express our dismay and disappointment on how the process leading to the enactment of the Eskom Amendment Bill was handled by the Minister of Public Enterprises Minister Stella Sigcau and Government. COSATU, NUM and NUMSA have consistently raised the importance of this bill and the need to kick-start discussions as early as 1997 with the Minister of Public Enterprises but all in vain. The matter has been a subject of negotiations at the Eskom between the unions and Eskom management in terms of the structures set up by the NFA. There is no agreement on the incorporation of Eskom into the company act at this level. This matter has not been referred to the NFA six per side. When the Bill was published and Parliament Committee on Public Enterprises organised public hearings, COSATU, NUM and NUMSA made a submission outlining their objections to the Eskom bill. (see attached document). A meeting was held involving the COSATU General Secretary, SACP General Secretary, NUM General Secretary and NUMSA General Secretary and the Minister of Public Enterprises on the 24 May 1998. At this meeting it was agreed that the all matters in dispute should be discussed in a meeting involving the senior political leadership of the Alliance and Minister of Public Enterprises, Minster of Finance and the Minister of Minerals and Energy. No such a meeting was organised. We believe that this bill, that will be enacted this afternoon will have a significant and detrimental impact upon the social and economic lives of the citizens. We believe that the incorporation of Eskom into the Company Act of 1973 is will lay basis for privatisation and that corporatisation, will in the long-term weaken the hold of government as the owner. Company Act is meant to govern privately owned companies not the state owned enterprises. Our view of the Company's Act of 1973 is that it has the following adverse effects or consequences. 1) The control by the state would be downplayed because the fiduciary duties to directors will not compel them as persons/individuals to report to Parliament. 2) Ownership through shareholding is tantamount to owning the name "Eskom" and not the assets and the related reserves. 3) In terms of the Cost Act - the board will be subjected to repute to the executive of the government rather than parliament. 4) Privatisation of Eskom will be easy as the government can just sell shares in Eskom at the Johannesburg Stock Exchange. Our view is that government in order to asset itself in terms of power, accountability and control of Eskom should rather utilize the "Reporting by Public Entities Act of 1992 as amended in 1997" which will have the following effects and ensure the following:- 1) The board is accountable to Parliament and their activities and affairs of Eskom will be reported to Parliament as a statutory requirement. 2) The Executive and the board of Eskom would be subjected to scrutiny and overseeing by Parliament. 3) Assets and related reserves and assets would be directly owned by the state. COSATU, NUM and NUMSA in its submission to the Portfolio Committee on Public Enterprise. In our submissions we emphasised the following points:- 1) Ownership and Control: That the ownership of Eskom's reserve and other assets must rest in the state. 2) Taxation of Eskom: We hold a view that Eskom should be exempted from the payment of Tax and dividends in terms of Section 24 of the Eskom Act. Our argument is that there has been no proper assessment of how the taxation of Eskom program and that such assessment should be made as part of the development of the overall government energy policy. This view is supported by the recently released white paper on Energy which says that the government will investigate the implication of taxing the electricity industry. We fear that the above stated government intention to incorporate Eskom into the Companies Act of 1973, is to allow corporatisation to take place so that the Company should pay Tax and privatisation of Electricity. Using the need for government to make Eskom accountable to the state as a smokescreen. First this means, the price of electricity will go up and be put beyond the reach of the poor. It means that those who can afford to pay will get services. Secondly, the state will no longer provide electricity but will regulate or make the laws that govern electricity. This we view, as the biggest change of heart from the government. South Africa provide the cheapest electricity in the world and investors view this as an incentive to come and build factories in South Africa, which we desperately need. This advantage may be nullified. Finally, we want it be known that in the light of the stated saga, COSATU, NUM and NUMSA are in dispute with the state in terms of Section 77 of Labour Relations Act of 1995 and Section 5 of the Nedlac Act. In a meeting held between COSATU Deputy General Secretary, NUM General Secretary, NUMSA General Secretary, Minister Public Enterprises and Minister of Mineral and Energy a dispute was declared by COSATU and its two affiliates (NUM and NUMSA) Nowetu Mpati COSATU Head of Communications Tel: + 27 + 11 + 339-4911 Fax: + 27 + 11 + 339-2281 E-mail: nowetu@cosatu.org.za