Plan to reduce ESKOM debt will improve liquidity & cut funding risks, says Moody's.
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GUEST – Dr Azar Jammine, director and chief economist at Econometrix
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.
The proposed R254 billion of relief announced in February’s budget is aimed at strengthening Eskom’s balance sheet and covering all interest payments over the next three years, provided it brings in private partners to help operate its plants and the electricity transmission network. That would free up money for the utility to undertake plant maintenance and improve the transmission and distribution infrastructure as the country battles almost daily electricity rationing.
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.
The proposed R254 billion of relief announced in February’s budget is aimed at strengthening Eskom’s balance sheet and covering all interest payments over the next three years, provided it brings in private partners to help operate its plants and the electricity transmission network. That would free up money for the utility to undertake plant maintenance and improve the transmission and distribution infrastructure as the country battles almost daily electricity rationing.
