South Africa’s main business-lobby group, Business Unity South Africa, has welcomed proposals by the Congress of South African Trade Unions to rescue debt-stricken power utility Eskom, a rare instance of harmony between the two sides on a key policy issue.

Cosatu on Monday presented its plan to the so-called President’s Working Council, which includes government, business and labour leaders. The labour federation has suggested that state-owned institutions take over R254bn of Eskom’s debt.

“We welcome the constructive approach,” Martin Kingston, vice president of Busa, said by phone on Monday. The business community is in alignment with Cosatu on many of Eskom’s problems that the labour federation identified, though they’re not in agreement on all of the proposals, he said.

Cosatu’s plan would leave Eskom, which provides 95% of South Africa’s electricity, with R200bn of debt, an amount the utility has previously said it could manage. Eskom is failing to cover its running costs, and inadequate maintenance is leading to frequent plant breakdowns and rolling power outages. Those are stalling economic growth.

Whatever arrangements are made to deal with Eskom’s debt must be underpinned by the principle of a return on capital, Kingston said.

Rival support

Cosatu garnered support for its proposals from the rival Federation of Unions of South Africa and National Clothing and Textile and Allied Workers Union, along with community groups, said Matthew Parks, Cosatu’s parliamentary co-coordinator. He described Monday’s meeting as “very positive,” with participants agreeing to hold a second meeting under the auspices of the National Economic Development & Labour Council on February 5.

“Everyone recognised the extent of the crisis we are in and agreed it’s time for action,” Parks said by mobile-phone text message. There is “lots of hard work ahead, but this could be a major turning point.”

Participants at Monday’s meeting agreed that Eskom must reduce its debt, though proposals on how the loans are serviced must be feasible, Kingston said. With banks and other financiers becoming increasingly reluctant to fund the utility, there is a willingness to consider development-finance institutions and other bodies like the state pension fund manager, the Public Investment Corporation, as sources of finance, he said.

“The pool of capital is shrinking rapidly,” Kingston, who is executive chairperson of Rothschild & Co.’s South African unit, said. Any lending should not breach the mandates or affect the fiduciaries of the organizations involved, he added.

“Within those constraints we are more than happy, very happy and keen to work with Cosatu and other social partners” to resolve Eskom’s debt problems, Kingston said.

Business and labour delegates at Monday’s meeting also agreed to start a discussion about the use of prescribed assets, or private pensions, to fund state infrastructure, Parks said. Ramaphosa last year mooted the idea of tapping the nation’s R2.4trn private savings industry to foster economic growth.