Eskom remains biggest risk to SA economy: Analyst
Ratings agency, Moody's says Eskom needs 'significant external support' if it is going to successfully turnaround its fortunes.
Moody's has been responding to the power utility's 2018/2019 financial report issued last week.
The report painted a bleak picture for Eskom, with officials announcing a net loss after tax of nearly R21-billion.
"Moody's has sent a warning saying that Eskom needs more than just money thrown at it -- Eskom needs a strategic turnaround plan and we don't have one yet."
"Eskom remains South Africa's biggest risk."
Padoa believes Eskom could be the main culprit if South Africa reaches junk status.
"From a financial perspective [and look at Eskom's debt levels], if we hit junk status, Eskom is probably going to be the reason because of unsustainable debt."
"If Eskom can't give us our electricity, how do we grow the economy? We will have a serious problem if Eskom can't keep the lights on."
The report painted a bleak picture for Eskom, with officials announcing a net loss after tax of nearly R21-billion.
Sasfin Securities' Andrew Padoa says Eskom remains South Africa's biggest risk and there is no real plan in place to ensure it stays afloat.
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"The problem is that we're not actually fixing Eskom. Government is making a plan and giving funding to Eskom to keep operations going, but all we are doing is keeping it alive -- even though it is not functioning properly," said Padoa."Moody's has sent a warning saying that Eskom needs more than just money thrown at it -- Eskom needs a strategic turnaround plan and we don't have one yet."
"Eskom remains South Africa's biggest risk."
Padoa believes Eskom could be the main culprit if South Africa reaches junk status.
"From a financial perspective [and look at Eskom's debt levels], if we hit junk status, Eskom is probably going to be the reason because of unsustainable debt."
"Government needs to try and fix it, so it becomes a South African problem, it is more than just an Eskom problem."
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Explaining the importance of Eskom on ordinary South Africans' lives, Padoa says all businesses, whether large corporations and industry or small companies employing a handful of people or providing work for individuals, the power utility is what stimulates the economy."If Eskom can't give us our electricity, how do we grow the economy? We will have a serious problem if Eskom can't keep the lights on."
