Pretoria - Rating agency Standard & Poor’s has affirmed Eskom’s credit rating at BBB-.
“Standard & Poor’s (S&P) has affirmed Eskom’s local and foreign currency corporate credit rating at ‘BBB-’, with a negative outlook. On 20 June 2014, the agency placed Eskom on negative CreditWatch, this has now been removed,” said Eskom in a statement on Tuesday.
S&P believes that the Government’s Support Plan will support the liquidity and credit metrics of Eskom in the near term. It also demonstrates the extremely high likelihood of government support to the utility.
At a special meeting in Cape Town in September, Cabinet approved a package to support a strong and sustainable Eskom to ensure that the energy security of the country is maintained, as well as supporting GDP growth.
The package was based on recommendations from an Inter-Ministerial Committee which reviewed an extensive set of options available to ensure energy security.
Eskom is facing significant challenges that threaten its sustainability. These include a funding gap that requires closing to ensure security of supply. The main contributors to this gap include the fact that Eskom will not be generating enough revenues to cover the costs of electricity supply.
“The affirmation of Eskom’s credit rating and the removal of the CreditWatch is a very constructive action by the agency. Eskom remains confident that the support from Government will stabilise the credit metrics and the liquidity position. We will continue to implement the initiatives identified with the support package from government to improve the financial profile of Eskom and move towards a more stable credit rating environment,” said Eskom Finance Director Tsholofelo Molefe.
Eskom Chief Executive Tshediso Matona said: “Eskom is encouraged by the affirmation of its credit rating by S&P, this will greatly assist in achieving financial sustainability of Eskom and to execute its infrastructure investment programme”. – SAnews.gov.za
