...Eskom Holdings SOC Ltd.'s (B/Stable) fifth multi-year price determination period (MYPD5) covering FY23-FY25 (financial years ending March) will begin in April 2022. Eskom has applied for a 20.5%, 15.07% and 10% tariff increase for FY23, FY24 and FY25 respectively, which is higher than Fitch Ratings' forecast of 13%, 8% and 8%. Eskom's application is largely driven by increases in primary energy costs, independent powe r producer (IPP) input costs and carbon taxes. Fitch's lower assumptions are based on the fact that the National Energy Regulator of South Africa's (NERSA's) final determinations have been lower than Eskom's applications in recent years. We think it is possible that any tariff increases could lead to lower-than- forecast sales volumes and higher bad debts, particularly in the current economic environment, although electricity demand has traditionally been relatively price inelastic. Nevertheless, tariffs that are higher than Fitch expects and that are more cost reflective...
