As far as it goes, Moody’s is quite correct. Pouring tens of billions of additional rands into the Eskom black hole – with nary a plan for the utility’s revival to be seen – is obviously not ideal.
But in the government’s defence, it’s the least bad option currently available. Allowing Eskom to collapse under the weight of its own failures would almost certainly trigger a run on the utility’s debts by creditors. Since the SA government has guaranteed about R350bn of it, that means a pretty big bill suddenly coming due. Spending R75bn this year is bad. Spending R350bn would be a lot worse.
To give credit where it’s due, Moody’s is right about another thing: “The lack of a strategy to return Eskom to a more stable financial situation that would reduce the need for government support exacerbates the problem for the government.” You’re telling us.