NUM to challenge Eskom restructuring in court, accuses Presidency of overreach

The National Union of Mineworkers (NUM) is preparing legal action against President Cyril Ramaphosa and the state over plans to restructure Eskom, saying the process could threaten the utility and the broader economy.

Decision follows NEC meeting and Ramaphosa’s endorsement

The union’s national executive committee, its highest decision-making body between national congresses, decided to pursue legal action at a meeting in Pretoria held from August 5-7. The move follows President Ramaphosa’s endorsement last month of the Phase I report of the Eskom Restructuring Task Team, which clears the way for creating an independent, state-owned Transmission System Operator (TSO).

NUM warns of financial and social consequences

NUM Energy Sector Co-ordinator Khangela Baloyi said the union has consistently opposed Eskom’s restructuring and unbundling plans because of their potential impact on workers and the wider economy.

“This issue is not only going to affect the workers of Eskom, it’s going to affect the whole society. It’s going to affect the workers that are working for the coal mines. It’s going to affect the whole value chain of workers that are actually assisting in the production of energy,”

Baloyi warned that removing transmission assets and revenue from Eskom could undermine the utility’s financial position. The article reports that Nyathi has reportedly warned that transmission accounts for about 40% of Eskom’s balance sheet, and that the Phase I report proposes transferring around R100 billion of National Transmission Company South Africa (NTCSA) assets to the TSO.

Baloyi said:

“Yeah, no, if it is rushed, actually, in simple terms, it is going to result in the death of Eskom. The chairman is correct. Once you decide to remove a part of revenue from the Eskom books, it will definitely affect the liquidity of that company.”

Union rejects claims that restructuring is urgent

Ramaphosa has argued the Phase I report will introduce greater competition, unlock investment, lower electricity prices and improve energy security. Baloyi rejected the view that Eskom urgently needs restructuring, pointing to improvements in performance.

He said:

“Presently, Eskom is functioning very well. We understand Eskom had its own problems. And those problems were related to restructuring anyway. But now Eskom is functioning very well. We are presently at 65% EAF (Energy Availability Factor), where we are coming from 55% in 2023. So why do you want to fix a company that is not broken?”

Legal route and questions over task team’s authority

The NUM is consulting lawyers on a legal challenge and plans to meet them next week to determine its next steps. The union previously sought legal advice and was told it was premature to approach the courts until a triggerthe Phase I reportwas released.

Baloyi said the union wants the courts to determine whether the Presidency had the legal authority to establish the restructuring task team and questioned the Presidency’s role in forming it. He said the union had also approached the Tokiso Dispute Settlement and has a pending matter there under review.

Baloyi added:

“Politicians must leave Eskom alone, leave it to technocrats to run it. The problems of Eskom are known by technocrats. The problems of Eskom, all of them cannot be solved by the proposed unbundling.”

NUM’s broader concerns

Baloyi outlined four challenges Eskom facesmunicipal debt, the cost of primary energy, the cost of electricity purchased from independent power producers and declining Eskom electricity salesand said those issues cannot be resolved solely by separating the company into components.

He warned:

“Sometimes when you try to fix something that is not broken, you end up breaking it, and that will create serious problems for society as a whole, because the death of Eskom is the death of the economy.”