Moody's: Unbundling plan does little to solve Eskom's financial woes
Credit ratings agency Moody's said in a research report that Eskom remained a significant risk to the country's fiscal strength.
JOHANNESBURG - The South African government's plan to split struggling state power company Eskom into three entities does little to address the company's financial difficulties, credit ratings agency Moody's said in a research report.
"The move paves the way for a more transparent group with more clearly allocated revenue and cost between business segments," Moody's said, adding that Eskom remained a significant risk to the country's fiscal strength.
"However, in and of itself it does little to address Eskom's financial challenges," Moody's said.
During President Cyril Ramaphosa's State of the Nation Address on Thursday evening, he announced that in order to turn around the embattled state power utility, three separate entities will be established to deal with generation, transmission and distribution under Eskom Holdings.
"To bring credibility to the turnaround and to position South Africa’s power sector for the future, we shall immediately embark on a process of establishing three separate entities – Generation, Transmission and Distribution – under Eskom Holdings.
"This will ensure that we isolate costs and give responsibility to each appropriate entity.
"This will also enable Eskom to be able to raise funding for its various operations much easily from funders and the market."