Moody's say tariff increases will be credit positive for Eskom
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JOHANNESBURG - Rating agency Moody’s today released a note on Eskom’s application for new tariff increases.
Moody's said that if the tariff increases were to be approved, it would be credit positive for Eskom.
"A 15% rise in each of the three years would allow Eskom to address rising operating costs and its still sizeable capital expenditure programme, which includes the completion of coal-fired generation projects as well as new investment projects. The additional cash flow would also allow it to meet its debt-servicing costs more easily. Recent regulatory decisions suggest that Eskom may struggle to achieve tariff increases of this size," Moody's said in its note.
Lower tariffs would maintain pressure on Eskom’s financial profile and be likely to prompt further action to cut costs.
Earlier this year in October, the National Energy Regulator of South Africa (Nersa) published the application by the country's state-owned utility Eskom Holdings for a 15% tariff increase in each of the three years from 2019-20 to 2021-22.
Nersa will announce its decision on the application on 1 March 2019.
BUSINESS REPORT ONLINE