The ratings on South Africa-based electricity utility ESKOM Holdings Ltd. reflect the company's dominant position in the South African electricity market; its 100% government ownership, which is not expected to change in the near term; an increasingly supportive regulatory regime following the introduction of multiyear price reviews; and material implicit and explicit support from the Republic of South Africa during the crucial build program aimed at increasing generation capacity, which will last about five years. These strengths are mitigated by a very substantial, largely debt-financed capital expenditure program necessitated by the tight reserve margin in South Africa; a range of operational, cost, and construction risks associated with the program; and an expected material weakening of debt coverage ratios and liquidity
