South Africa’s Eskom plans to spend up to $27 million on severance packages

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JOHANNESBURG (Reuters) – South Africa’s Eskom has offered some managers voluntary severance packages, capping costs at 400 million rand ($26.8 million), a communique sent to staff by the struggling power utility showed.

Eskom does not generate enough cash to cover its mammoth debt servicing costs and expects to make a loss of around 20 billion rand this financial year.

The severance packages are open to managerial employees in non-core positions as well as managers from 60 to 62 years old, according to the communique, which was dated Feb. 6.

Eskom spokesman Sikonathi Mantshantsha declined to comment.

Analysts have long said that Eskom should cut its bloated workforce of more than 46,000 staff.

Under pressure from trade unions, South African President Cyril Ramaphosa said last year that voluntary severance packages would be the preferred method to cut costs at Eskom, rather than layoffs.

Eskom said in the communique that staff could apply for the severance packages from the third week of February, with employee exits planned for the end of April.

Eskom also offered voluntary severance packages in 2015.

($1 = 14.9245 rand)

Reporting by Alexander Winning; editing by Jason Neely

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