The South African Federation of Trade Unions (SAFTU) unequivocally rejects the expansion of Operation Vulindlela — a neoliberal structural reform agenda that is accelerating the privatisation of South Africa’s public infrastructure through stealth and euphemism.
Under Phase II, launched by President Ramaphosa on 7 May 2025, we are witnessing an intensified handover of critical public goods to private profit-seeking interests — under the pretense of reforming the state. In reality, these are not reforms — they are acts of economic vandalism against the working class.
The overall goals of Vulindlela were laudable, but it is impossible for the state to claim success on these, especially when it comes to Eskom’s stabilisation, efficient Transnet rail and port freight logistics, lower digital communication costs, and increased bulk water supply. In each case there were failures associated with the reliance on for-profit partners.
Most obviously, Phase 1 began in October 2020, and according to the latest SA Reserve Bank data on public corporations’ fixed investment, the level both then and today is just 75% of what it was in 2019. Public corporations’ investment had fallen rapidly at the outset of Covid-19, then stabilised until late 2022 when it briefly rose to 82% of 2019 levels, but in 2024 fell back rapidly to historically low levels. Vulindlela obviously did not achieve a turnaround in the parastatals.
Operation Vulindlela Stage 1 objectives
Operation Vulindlela Stage 1 claimed accomplishments
What, then, are the problems that have caused such degeneration of public corporations’ investment, and overall management of South Africa’s state infrastructure? Eskom is, after all, still subject to extreme power outages – Stage 6 load-shedding in February and periodic State 2 – and former Reserve Bank Deputy Governor Kuben Naidoo last year estimated that at least half the reason for the overall decline in outages is an external reason: lower demand caused by much lower commodity prices (for high-consuming mining and smelting operations).
CREEPING PRIVATISATION IN DISGUISE
Most importantly, the Presidency and National Treasury have used Operation Vulindlela to open backdoors for private capital to encroach on public infrastructure:
- At Transnet, public freight rail lines are being opened to third-party operators — a shift that undermines the role of a unified public logistics system. While Transnet is financially suffocated, having lost R7.3 billion last year (and carrying a R136 billion debt burden), private companies are allowed to cherry-pick profitable routes, which will require even greater state subsidies for less popular freight destinations, and less likelihood of restarting long-overdue passenger rail services. The public interest is undermined in this process, because with the privatisation of the railroads, the state will have less capacity to ensure that freight currently being hauled on fast-deterioriating roads by dangerous, high-polluting trucks, moves to rail. Britain’s privatised rail experience since 1993 proves that a for-profit system leads to vastly increased fares, reduced service quality and safety, and more state subsidies than prior to privatisation, and a worse overall experience than provided through entirely state-owned services elsewhere in Europe.
- Transnet continues its general decline, including at ports where Vulindlela has failed to turn around services considered amongst the worst of any ports in the world. To illustrate the mistaken gamble its leaders are taking on private rail and port concessions, at Durban Pier 2, a port handling nearly half of South Africa’s container traffic, a public-private partnership has been signed with Manila-based International Container Terminal Services Inc. This is de facto privatisation of 49% of a strategic asset — with no public referendum or parliamentary scrutiny – and because of irregularities in the process (including Transnet’s failure to assess the Filippino bidder’s financial health), the Durban High Court agreed with a competitor to halt the process.
- In the water sector, the creation of a National Water Resources Infrastructure Agency is laying the groundwork for large-scale PPPs, enabling corporations to design, build, and operate water systems — even as millions go without reliable water access. South Africa’s bulk water supply – especially the Lesotho Highlands Water Project – has been a site notorious for private-sector corruption dating to the late 1990s, and it is obvious state regulation is inadequate to manage complex contracts in the water sector.
- In electricity, the state has shifted its investment role to that of a broker for Independent Power Producers (IPPs). These companies now supply power under secretive, long-term Power Purchase Agreements (PPAs) — some extending 20 years — whose terms remain undisclosed to the public and Parliament
IPPs: PRIVATISED PROFIT, PUBLIC COST
SAFTU has long warned that the IPP model is a Trojan Horse for energy privatisation:
- Eskom is forced to buy electricity from IPPs at predetermined prices, often higher than the cost of its own generation — even when not needed.
- These deals contain guaranteed off-take clauses and inflation-linked payments, ensuring maximum profits for IPPs, regardless of grid demand or supply crises.
- While private investors are protected from market risk, the cost is dumped on Eskom’s balance sheet — and ultimately on consumers, in the form of spiralling electricity tariffs.
- The latest NERSA data confirms that Eskom now spends over R16 billion annually on IPP payments — up from R9 billion five years ago — while the public endures blackouts and job losses.
By all accounts, the privatisation of electricity generation has added far greater costs – as foreign IPP owners typically require 30% rates of return paid in hard currency – which in turn has allowed Eskom to avoid a logical mandate, of serving as a state-owned agency supplying renewables, with worker and community control. Too many privatisers and commercialisers have run Eskom capacity into the ground, and the needed decarbonisation has not occurred because of the search for narrowly defined profits without considering social and environmental needs.
FROM PUBLIC INFRASTRUCTURE TO CORPORATE RENTIERISM
Operation Vulindlela has been responsible for this very mentality permeating public corporations. It is vital that a U-turn be made so that the public interest is served, instead of private profits.
What we are witnessing is not reform — it is the transformation of essential public infrastructure into profit-making platforms for private capital, backed by state guarantees and subsidies:
- Private sector “efficiency” is a myth when profits are locked in, risks are carried by the state, and workers face retrenchments.
- This is austerity for the public, and bailouts for capital. It is neoliberalism by another name.
SAFTU DEMANDS
- An immediate halt to privatisation and creeping outsourcing across SOEs, energy, ports, water, rail, and municipal services.
- Full public disclosure of all IPP and PPP agreements, including Eskom’s power purchase contracts and terms.
- Renationalisation of energy investment and generation, with Eskom rebuilt as a unified, fully public entity serving social needs — not corporate interests.
- Investment in public infrastructure and jobs, funded through progressive taxation, ending corporate tax holidays, and repurposing GEPF funds for social benefit.
- Democratic control of strategic sectors, with oversight from workers, communities, and elected representatives — not handpicked technocrats.
We say:
NO to privatisation. NO to secret deals. YES, to public control, decent work, and infrastructure for the people!
SAFTU will mobilise workers across sectors to defend public goods from capitalist plunder. Operation Vulindlela must be stopped — and replaced with a democratic, redistributive economic plan for the many, not the few.
A Statement was issued on behalf of SAFTU by General Secretary Zwelinzima Vavi.
For more details, contact the National Spokesperson at:
Newton Masuku
066 168 2157
