JOHANNESBURG– Measures taken to turn the fortunes of Eskom around will yield positive results despite a rating downgrade by international rating agency, Fitch Ratings, says the South African power utility’s new interim Group Chief Executive Officer (CEO), Phakamani Hadebe.

The rating agency downgraded the power utility’s long-term local currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings to BB- from of BB and maintained the ratings on rating watch negative (RWN).

We take note of the decision by Fitch to downgrade Eskom’s credit rating. We firmly believe that the measures being implemented to turn the company around are yielding the favourable results,” Hadebe said here Wednesday.

We have seen renewed enthusiasm from financial markets to support Eskom’s funding plan and the preliminary engagements with market participants have had positive outcomes.”

Hadebe said State-owned Eskom is aware of it’s challenges and added that management is geared to effectively resolving them. We are geared to effectively resolving these challenges and improve Eskom’s operational and financial sustainability in the interest of the South African economy, he said.

In its statement, Fitch cited weakening liquidity of Eskom and the company’s uncertain capacity to fulfil its short-term financial commitments as the underpinning rationale for the decision.

Eskom’s acting Chief Financial Officer, Calib Cassim, said there is a need to work speedily to resolve its financial challenges.

The next few months will be difficult, but we need to work speedily and with a level of urgency in order to resolve our financial challenge. We are making progress in expediently resolving Eskom’s financial challenges; we will also continue engaging the rating agencies and the financial markets to address their concerns and improve investor sentiment and ultimately restore Eskom’s healthy liquidity position, said Cassim.

On Tuesday, Hadebe presented the utility’s interim results at a media briefing in Johannesburg. The utility’s net profit after tax dropped from 10 billion Rand to 6.0 billion Rand. It reported earnings before interest, tax, depreciation and amortization (EBITDA) of 30 billion Rand (Sept 2016: R32 billion). Eskom’s net profit after tax came to 6.0 billion Rand (Sept 2016: 10 billion Rand), with higher depreciation and net finance cost due to new build units coming online.

Earlier this month, Moody’s downgraded the utility to B1 from Ba3. The state-owned entity’s zero coupon eurobonds rating was similarly revised to B1 from Ba3, in line with the corporate family rating (CFR) and the global medium-term note (GMTN) programme. The senior unsecured GMTNs of Eskom have been downgraded to (P)B2/B2 from (P)B1/B1.