MUSCAT: International ratings agency Fitch Ratings has affirmed Oman Electricity Transmission Company SAOC's (OETC) Long-Term Issuer Default Ratings (IDR) and senior unsecured rating at 'BB+'. The outlook on the IDR is stable, it stated on Thursday.
Majority state-owned OETC – part of Nama Group - is a monopoly provider of electricity transmission services to the main interconnected system in the north of Oman and to the transmission network in Dhofar Governorate. . It covers about 95 per cent of the market under the license issued by the Authority for Public Services Regulation (APSR).
“Fitch assesses the Standalone Credit Profile (SCP) at 'bb+'. Our view is supported by OETC's strong business profile, which will remain commensurate with the rating under Price Control 6 (PC6).
The SCP reflects OETC's dominant market position as the natural monopoly national transmission system operator within a supportive regulatory framework, stable earnings profile and EBITDA fully generated from regulated electricity.
These factors are offset by forecast negative free cash flow (FCF) over the next four years due to significant capex, leading to average funds from operations (FFO) net leverage of 6.4x in 2022-2026 (vs a negative rating sensitivity of 6.7x),” the ratings agency noted.
“Based on our criteria, OETC can be rated up to one notch above the sovereign rating of Oman (BB/Stable),” it further added.