Moody’s Investors Service believes that South Africa’s plan to provide debt relief to struggling power utility Eskom and potentially write off municipalities’ arrears to the company will improve liquidity and reduce funding risks for the government.
Moody’s, a rating agency, stated in a research note that Eskom, the South African utility company, is unlikely to meet its performance targets due to mismanagement, coal supply issues, skills shortages, sabotage, and theft.
Eskom had set ambitious goals to improve its Energy Availability Factor (EAF) to 65% by March 2024 and 70% by March 2025, but currently, its fleet has an EAF of 57%. Moody’s emphasized that these targets are challenging given Eskom’s difficulties and track record.