Moody's recently affirmed Eskom's credit rating with a stable outlook but cautioned that the next phase of the utility's unbundling process could adversely affect its business risk profile.
The planned separation of the National Transmission Company South Africa (NTCSA) from Eskom could weaken the power utility's financial position if not carefully managed, according to energy experts responding to concerns raised by ratings agency Moody's Ratings.
Moody's recently affirmed Eskom's credit rating with a stable outlook but cautioned that the next phase of the utility's unbundling process could adversely affect its business risk profile.
The agency said the establishment of NTCSA marks a critical step in South Africa's electricity sector reforms aimed at attracting private investment, but warned that further separation of the transmission business from Eskom would be complex and potentially damaging to the utility's financial strength.
According to Moody's, the transfer of transmission assets and associated cash flows to NTCSA could significantly impair Eskom's credit quality unless mitigating measures are put in place.
