Fitch: Eskom view negative

Fitch Ratings said Eskom Holding Ltd. outlook for its long-term local-currency issuer default rating of A and national long-term rating of AAA (zaf) remain negative, despite the National Energy Regulator of South Africa's decision to approve an additional 13.3% average tariff increase.

"Fitch acknowledges that the approved cumulative average increase of 27.5% since December 2007 is an indication of Nersa's commitment to work toward cost-reflective tariffs. However, it remains to be seen if a combination of gradual double-digit tariff uplifts and financial support by the South African government will be sufficient to protect Eskom's credit profile in the current market context of massive [capital expenditure] requirements to deal with inadequate reserve margins," Erwin van Lumich, a deputy head at Fitch, said in a written statement.

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