South Africa’s state-owned power utility Eskom has received a long-term credit rating upgrade from S&P Global Ratings, reflecting improvements in the utility’s operational performance and financial recovery.
The agency raised Eskom’s rating from B to B plus a stable outlook, citing stronger electricity supply and a return to profitability.
The upgrade applies to Eskom’s foreign- and local-currency debt, including senior secured and unsecured bonds.
Government-guaranteed foreign-currency debt was also lifted, moving from BB minus to BB plus.
The improvements follow Eskom’s multi-year Turnaround Plan, which aims to restore generation, boost plant performance, cut emergency power use, and strengthen management.
Eskom’s return to profit
South Africa’s state-owned power utility Eskom posted its first full-year profit in eight years, an achievement that helped support the recent credit rating upgrades from S&P Global and Moody’s.
The progress reflects stronger operational performance, with electricity supply reaching 97.9 percent of the time in the 2025 financial year, up from roughly 96 percent in 2024.
The upgrades come as part of Eskom’s multi-year Turnaround Plan, a programme designed to rebuild generation capacity, enhance the performance of ageing power stations, limit dependence on costly emergency power, and reinforce management practices across the utility.
Eskom Group Chief Executive Dan Marokane said the rating action reflects progress under the plan.
“The Turnaround Plan has been pivotal in restoring Eskom’s operational and financial stability. We have moved decisively from a generation crisis to a phase of reliability and disciplined management,” he said.
Debt pressures persist
Despite these gains, Eskom faces significant financial and operational challenges. Unpaid municipal debt has risen above R100 billion ($5.81 billion), straining the utility’s liquidity and remaining a key constraint on further credit improvements.
Eskom Chief Executive Dan Marokane has warned that the utility cannot complete its long-delayed unbundling until municipalities settle the massive arrears owed to the company.
He noted that the municipal arrears of about R100 billion ($5.8 billion) remain the biggest barrier to carving out the distribution business.
“The unbundling of the distribution business will not happen unless we can solve the municipal debt,” he said.
The utility continues to navigate a complex restructuring process aimed at separating its generation, transmission, and distribution operations.
Government reforms also aim to open the grid to greater private participation and accelerate investment in renewable energy and transmission infrastructure.
The unbundling plan, first announced by President Cyril Ramaphosa in February 2019, is intended to help Eskom’s divisions raise funding independently and improve management of their debt and operational costs.
The plan has experienced multiple delays, but the government is now stepping in to support the recovery of overdue municipal debts.
These measures form part of broader efforts to stabilise state-owned enterprises and secure long-term electricity supply.
Recovery after instability
The latest rating actions follow a difficult decade for Eskom, marked by underinvestment, declining plant performance, governance failures, and widespread load-shedding.
Heavy reliance on costly diesel-fired emergency generation, along with other operational challenges, weakened investor confidence and imposed significant costs on South Africa’s economy.
However, improved plant performance has reduced the need for emergency power, lowering operational costs.
Combined with stronger oversight and the return to profitability, these developments have improved the utility’s overall credit outlook.
Moody’s Investors Service also upgraded Eskom’s long-term corporate family rating to B2 from Caa1 and assigned a stable outlook.
The company noted similar improvements in operational reliability, governance, and financial management.
The consecutive upgrades from both major rating agencies indicate growing confidence in Eskom’s recovery and a reduced risk profile compared to previous years.
