Chamwe Kaira
Namibia Power Corporation (NamPower) has stronger liquidity and leverage metrics than South Africa’s power utility Eskom, according to a recent assessment by Fitch Ratings.
The ratings agency said Eskom continues to depend heavily on support from the South African government to maintain its operations, while NamPower is viewed as having a stronger financial position and lower reliance on direct state intervention.
In its latest ratings action commentary, Fitch affirmed Eskom Holdings SOC Ltd’s long-term local-currency issuer default rating at ‘B’ with a stable outlook. The utility’s standalone credit profile remained at ‘ccc+’.
Fitch said Eskom’s rating is largely supported by expectations of continued government assistance.
The agency noted that Eskom’s leverage and liquidity are “notably weaker” than those of NamPower, which holds a ‘BB-/Stable’ rating and a standalone credit profile of ‘bb-’.
According to Fitch, Eskom’s financial challenges stem from growing municipal debt, pressure on liquidity and electricity tariffs that do not fully cover costs.
The utility continues to rely on South Africa’s debt relief programme to support its liquidity and debt-servicing obligations.
Fitch said Eskom’s total support score of 30 reflects “very likely” support from the South African government under its Government-Related Entities criteria.
The score is similar to those of utilities in Uzbekistan and Kazakhstan but lower than major Gulf utilities such as Saudi Electricity Company and Abu Dhabi National Energy Company PJSC, which benefit from stronger state backing.
Despite its financial challenges, Eskom’s operational performance improved during the past year.
Fitch said Eskom’s energy availability factor rose to nearly 65% in the 2026 financial year from 55% in 2024.
South Africa has also gone nearly a year without major power outages, reducing the utility’s reliance on costly diesel-powered generation.
The agency forecasts Eskom’s EBITDA will average about N$90 billion between 2026 and 2030, supported by tariff increases and operational improvements.
However, Fitch warned that large capital spending requirements and rising municipal debt continue to place pressure on cash flows.
Municipal debt owed to Eskom reached N$111.6 billion after increasing by N$17 billion during the 2026 financial year.
Fitch warned that further deterioration in municipal payments could weaken Eskom’s financial position because municipalities account for about 40% of its electricity sales.
The utility is working with the South African government on measures such as distribution agency agreements and prepaid supply arrangements, although Fitch said progress has been limited.
The ratings agency also highlighted risks linked to South Africa’s plan to establish an independent transmission system operator as part of efforts to create a competitive electricity market by 2030.
Earlier this year, Eskom’s proposal for a fully independent transmission operator was not approved by the presidency, with a special presidential task team now overseeing the process.
Fitch estimates Eskom will spend about N$322 billion on capital projects between 2026 and 2030.
About 42% of the funding will go towards transmission infrastructure, while 40% will be allocated to generation projects.
The investments are aimed at modernising the electricity grid and supporting renewable energy integration, but Fitch expects them to result in negative free cash flow during the period.
Despite these challenges, Eskom’s debt burden is expected to remain below previous highs.
Fitch forecasts net debt will rise to N$295 billion by 2030 from N$226 billion in 2026. This remains below the nearly N$400 billion recorded in 2023.
