South Africa’s debt-laden, state-owned power utility, which intensified supply cuts that threaten businesses Monday, continues to represent a significant risk to the country’s finances and President Cyril Ramaphosa’s plan to split the company into three does little to address the producer’s problems, Moody’s Investors Service said.
Providing Eskom Holdings SOC Ltd. financial support before taking measures to generate savings at the utility would be credit-negative for the country, Moody’s said in an emailed report Monday. The remedies would entail “unpopular decisions on electricity tariffs and/or additional cost-cutting that would require agreement from key stakeholders,” it said.
Moody’s comments come as Eskom implemented so-called stage 4 rotational power cuts throughout the country on Monday. That involves taking 4,000 megawatts demand out of the system to prevent a complete collapse. While generation units have returned to service, others have continued to trip, according to the utility.