President Cyril Ramaphosa is “favourably disposed” to a proposal by the country’s largest trade union federation to lower the debt of struggling state power utility Eskom, his spokeswoman said on Wednesday.

Union federation Cosatu proposed at a meeting with Ramaphosa and business leaders on Monday that the Public Investment Corporation (PIC) and local development finance groups could help lower Eskom’s debt by about R250 billion.

Cosatu wants the PIC, the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC) to invest in a special purpose vehicle that would house roughly R250 billion of Eskom’s R450 billion debt, according to a Cosatu presentation for Monday’s meeting seen by Reuters.

Cosatu parliamentary coordinator Matthew Parks said further talks would be held on Wednesday and the aim was to agree a “social compact” between government, business and labour on Eskom before Ramaphosa’s state of the nation address on February 13.

Ramaphosa agreed with government’s social partners on Monday that any steps taken on Eskom’s debt should not undermine the investment mandates or fiduciary duties of the PIC or other affected institutions, his spokeswoman Khusela Diko said.

The president said, “there needed to be a broader discussion around how financial institutions invest their money, since a relatively small portion of their funds were being directed to developmental projects,” according to Diko.

Cosatu is a key ally of Ramaphosa’s governing ANC.