PIC capture is not about the Guptas alone

As I noted more than two years ago, the tapping of public sector pensions to “recapitalise” parastatals — notably Eskom — was debated and apparently approved in principle by the ANC’s economic transformation committee (ETC) in May 2015.

Since the Mbeki era, proponents of competition in a regulated wholesale electricity market have proposed a clear separation between power generation — which could be in part private — and a transmission grid available to all players. This would allow the sale of some power stations to private investors.

ETC head Enoch Godongwana instead proposed bringing “equity partners” on board without breaking up the parastatal.

Supposedly because “privatisation” is unpalatable to “the left”, this could not be done because partnerships with private pension funds are off limits as a form of “privatisation”.

In reality, of course, no private pension fund will invest in Eskom — not without fundamental changes to how it operates, which the ANC lacks the stomach to bring about.

This is the real reason why PIC (and the GEPF money it manages) have sole access to this unique investment opportunity!

It is true that a further decline in Eskom poses a catastrophic threat to the interests of the PIC’s clients and to the value of the pension and insurance policies those clients protect. (And to everything else in this country.) But throwing money at unreformed parastatals will not avert such a catastrophe.

 

The PIC has also slowly established precedents for “political investing” in companies that offer no, or vanishingly little, prospect of returns. By throwing money into marginal platinum miner Lonmin, for example, it has hinted at a future in which public-sector pension funds will be used to buy out ailing but “politically connected” companies, so dumping their environmental and labour legacies onto retired public sector workers.

Eskom is a much bigger sinkhole, of course, but PIC is already getting sucked towards it.

So is this a problem caused by the Guptas and their friends in the Zuma faction?

Not really. Most of the ETC are anti-Zuma. And one important advocate in the wider movement is the hugely influential ANC Gauteng chair Paul Mashatile, who last year went on a tour to quietly promote just this course of action. He is pretty certain to be on the Ramaphosa/Mantashe slate as treasurer general.

 

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