Fixing loss-making power utility Eskom Holdings is complex and it will take time for the government and the company to agree to a plan, according to Moody’s Investors Service.

The energy firm, which supplies about 95% of the country’s power, has R450-billion of debt and is surviving on state bailouts after massive cost overruns at two partially completed coal-fired power plants. While the government has proposed splitting it into three units and a policy paper by the National Treasury proposes selling coal-fired plants, no strategy to stabilize its finances has been published yet.

“For us, there will be only one plan and that will be the one that both the government and the company agreed to,” Lucie Villa, Moody’s vice president and lead sovereign analyst for South Africa, said in an interview in Johannesburg on Monday. “Knowing the complexity of the issue, we know first that it will be an iterative process and that it takes time. So our view has been that is takes more than a few months to sort out certain issues.”

The government’s proposed 128 billion rand in assistance over three years will add to state liabilities and widen the fiscal deficit, she said, without giving an estimate.

The rand was little changed at 14.7720/USD by 8:20 a.m. in Johannesburg.

Moody’s is the only major ratings company that still assesses South Africa’s debt at investment grade. While it has a stable outlook on the Baa3 rating, one level above junk, analysts are speculating that it’s at risk of a downgrade given weak economic growth and rising debt.

A downgrade would leave South Africa without any investment-grade credit rating for the first time in 25 years. It would also see the country fall out of key bond indexes including the FTSE World Government Bond Indexpower, prompting outflows.

The budget shortfall is expected to climb to more than the 4.5% of gross domestic product forecast in the budget this fiscal year, with Fitch Ratings projecting the gap at 6.3% of GDP. That would be the biggest deficit in a decade.

While Moody’s hasn’t published new forecasts for South Africa, it has said failure to implement policies to narrow the gap could push the debt-to-GDP ratio, including guarantees to Eskom, above 70% in the “medium term.”

Moody’s will be able to better judge South Africa’s fiscal and economic outlook once the long-term plan for Eskom is known, Villa said. The company is looking for a balance between credible fiscal and debt numbers and detail on policy decisions in the medium-term budget statement, she said.

While South Africa’s economic and fiscal strength is eroding, it has credible institutions and a robust macroeconomic policy framework, Villa said.

“We think the institutions are well equipped to address that deterioration and to arrest it,” she said, adding that the new administration has the political will to implement policies.

Finance Minister Tito Mboweni is due to present the mid-term budget in late October, just weeks before Moody’s is scheduled to publish its next assessment on Nov 1.