The ratings on ESKOM Holdings Ltd., the South African electricity utility, reflect its critical role in the Republic of South Africa's (local currency A-/Positive/A-2; foreign currency BBB-/Positive/A-3) national Reconstruction and Development Program through its successful electrification program. They also factor in the government's intention to remain supportive of ESKOM's credit quality, improvements in efficiency, and a more supportive regulatory regime. These strengths are offset by a relatively weak financial structure, longer-term exposure to the restructuring of the electricity industry and more aggressive development of foreign and unregulated activities through its ESKOM Enterprises subsidiary. ESKOM's revenues are exposed to changes in tariff policy, and despite improvements in regulatory transparency and support, with a rise of 8.4% for 2003, ongoing rises in
