Eskom Holdings, South Africa’s indebted power utility, is considering selling distribution assets as prospects of the government taking over about half of its R392-billion obligations dim, people with knowledge of the matter said.

State-owned Eskom, which supplies almost all of South Africa’s power, has said that it needs to cut its borrowings to about R200-billion to be sustainable, and the idea of the government taking a chunk of the debt has been discussed for several years.

While the National Treasury may authorize the transfer of some of the debt to the sovereign balance sheet, Eskom wants to go ahead with a proposal to sell distribution assets, especially in major cities such as Johannesburg, to municipalities, the people said, asking not to be identified because the discussions aren’t public. It also wants to step up efforts to spur delinquent local authorities, which owe the utility about R41-billion, to pay their dues, they said.

Eskom is intensifying its efforts to generate cash that can be used to pay debt, instead of relying on the Treasury to bail it out, the people said. For South Africa, surging government debt and the cost of servicing it -- the fastest-growing expenditure in the budget since 2011 -- pose a challenge to taking over the utility’s obligations.

The National Treasury acknowledged receipt of emailed questions from Bloomberg and said it would respond later. Finance Minister Enoch Godongwana may outline plans to address Eskom’s debt in his February 23 budget. Eskom didn’t immediately respond to requests for comment.

Eskom has been working with advisory firm Lazard on certain aspects of a debt plan, while creditors are working with financial advisory firm Moelis & Co. to deal with the issue.

Eskom’s financial woes, caused mainly by a massive overspend on the construction of two of the world’s biggest coal-fired power plants, have led to it cut expenditure on maintenance and new capacity. The country has been beset by intermittent power outages for over a decade as a result with the number of blackouts rising to a record last year.