The ratings on South African power utility ESKOM Holdings Ltd. (ESKOM) reflect Standard&Poor's Ratings Services' view of the company's strategic importance as the country's dominant provider of electricity, present in all parts of the electricity value chain; its full ownership by the government, which has provided strong support during the build program through measures including a dividend moratorium, a capital injection, and guarantees on debt; and the introduction of an independent regulator that sets tariffs for ESKOM's revenues over three-year pricing periods, thereby providing a reasonable degree of transparency. These positive rating factors are offset, in our opinion, by ESKOM's very large, mostly debt-funded investment program that has been necessitated by capacity shortages in South Africa; a deterioration
