South Africa’s plan to provide its struggling power utility debt relief and potentially write off municipalities’ arrears to Eskom will ultimately improve liquidity and cut funding risks for the government, according to Moody’s Investors Service.
South Africa’s plan to provide its struggling power utility debt relief and potentially write off municipalities’ arrears to Eskom Holdings SOC Ltd. will ultimately improve liquidity and cut funding risks for the government, according to Moody’s Investors Service.
“If Eskom is able to deliver on the plan, which includes operational efficiency improvement, this would benefit the wider economy, including the sovereign, municipalities, banks and companies,” the ratings company’s analysts, including Benedicte Andries and Aurelien Mali, said in a note on Wednesday.
Eskom has been surviving on state bailouts for years because it can’t bring in enough income to cover its operating costs and service its loans. Acute breakdowns of its poorly maintained coal-fired plants have set back efforts to restore it to profitability and resulted in chronic electricity shortages.The rotational power cuts, known as load-shedding, began in 2008 and have hobbled South Africa’s economy, weakening the rand and adding to inflation.
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