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Saturday, 09 September 2023 12:20

Eskom welcomes Moody's upgrade rating outlook from positive to stable.

By Lehlohonolo Lehana.

Moody's Investors Service has warned that Eskom's long-term corporate family rating (CFR) remained constrained due to rising costs of diesel-fired gas turbines to keep higher stages of load shedding at bay.

It upgraded the long-term corporate family rating of Eskom to B2 from Caa1, its senior unsecured global medium-term notes to B2 from Caa2, its global medium term note programme to (P)B2 from (P)Caa2, and its zero-coupon Eurobonds to B2 from Caa1.

Moody's said the upgrade of Eskom's CFR and unguaranteed ratings followed the signing of the Eskom Debt Relief Act in July and receipt of the first payment to Eskom from the National Treasury last month.

The Act requires Treasury to advance R78bn in the 2023-24 financial year, R66bn in 2024-25, and R40bn in 2025-26 to Eskom to fund R168bn of debt maturities and R86bn of interest payments as part of the R254bn debt relief programme.

Eskom says it welcomes the decision by Moody's Investors Service to upgrade the organisation's rating outlook from positive to stable. 

"Coupled with the upgrades of several key ratings, the stable outlook will improve Eskom's creditworthiness, "says Eksom in a statement. 

The power utility says the  Eskom Debt Relief Act was a key factor in the rating upgrades. 

The Act, which was enacted on 05 July 2023, allows the government to provide Eskom with debt relief of R254 billion over the next three years. 

Eskom has already received the first tranche of R16 billion for the current financial year.

"The financial support from government has removed the financial barriers and bolstered Eskom's financial position. This has enabled us to plan ahead for the implementation of the necessary planned maintenance on the generation fleet, maintain and strengthen the network thereby contributing towards improved performance and long-term sustainability," says Eskom's acting Group Chief Executive," Calib Cassim. 

"The decision by Moody's Investors Service is reassuring in our efforts to turn Eskom around," adds Cassim.

Meanwhile rugby fans can expect slightly fewer interruptions to their TV time this weekend, with scheduled power cuts expected to ease a little from early on Saturday morning. 

This follows the implementation of Stage 6 when Eskom recently suffered several breakdowns at the same time as it ramped up maintenance.

 Stage 3 load shedding will be implemented from 05:00 until 16:00, followed by Stage 4 load shedding from 16:00 until 05:00 on Sunday.

The further reduction in the stages of loadshedding in the coming weekend is due to the expected additional generation recovery, improved emergency generation reserves, and the lower weekend demand.