Moody's reacts to Eskom split

File: Economist have raised concerns that putting Eskom's debt on the governments balance sheet could have negative implications.

JOHANNESBURG - Ratings agency Moody's says splitting Eskom into three entities may make the utility's cost structure more transparent.

But it warns the unbundling does little to address the debt-laden power utility's financial challenges.

The ratings agency has published a research note in reaction to President Cyril Ramaphosa's State of the Nation Address.

READ: Why the latest plan for Eskom could work

It warns that the speech offers few concrete measures to overcome structural challenges in the face of entrenched vested interests.

On Eskom, Moody's says it will now watch how government supports the power utility, what increase in electricity tariffs it's awarded by regulator Nersa, how and whether cost-cutting measures are implemented.

It will also keep an eye on whether government will be taking over the utility's R419-billion debt.