Energy: Eskom unlikely to avoid rate cut

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Granting South Africa’s state-owned power firm higher tariffs this week probably would not stave off a rating downgrade to junk unless the government also offered deeper financial assistance. Eskom is likely to win a price increase above the 8 percent already allowed by regulators, according to Elena Ilkova, a credit analyst at FirstRand’s Rand Merchant Bank unit. Standard & Poor’s, which cited concern about revenue stagnating and government backing on June 20, said it might cut the company to below investment grade when it announced the outcome of its review by the end of next month. “The cost increase, to me, is a given,” Ilkova said last week. – Bloomberg


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