Moody's says Eskom's future bleak

File: Analysts say there is a real threat that Moody's could downgrade South Africa to junk status.

File: Moody's says that Eskom's systems are under extreme pressure and the reserve margin will remain tight until the mid-2020s.

JOHANNESBURG - Ratings agency Moody's has painted a bleak picture of Eskom's future.

It says that its systems are under extreme pressure and the reserve margin will remain tight until the mid-2020s.

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In a research announcement, Moody's says Eskom will remain the dominant supplier, but will become less important.

The ratings agency also predicts that the country's heavy reliance on coal will change.

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Renewable resources and gas will play a bigger role. 

Although Eskom is addressing its challenges, a historic lack of investment means the situation will take time to improve.  

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Consumers are likely to bear the brunt of higher costs.

Moody's says government has a strong incentive to improve the utility's financial position.