MUSCAT: Fitch Ratings has upgraded Nama Electricity Distribution Company SAOC's (NEDC) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to 'BB+' from 'BB' with Stable Outlooks.
It was the first ratings action for NEDC, a subsidiary of Nama Group, following the completion of a landmark merger and restructuring of distribution and supply companies.
As a result of the merger and restructuring exercise, encompassing Muscat Electricity Distribution Company, Mazoon Electricity Company, Majan Electricity Company and Tanweer, two main companies were established: Nama Electricity Distribution and Nama Supply. They will oversee the provision of electricity services to all governorates of the Sultanate of Oman except for Dhofar Governorate, which is operated by Nama Dhofar Services that provides electricity, water and wastewater services in the southern parts of Oman.
Nama Electricity Distribution is responsible for providing services related to meter reading, and low voltage networks. The company's mandates also include constructing lines and transformers to ensure reliable services to customers. Nama Supply will be responsible for billing and collection operations.
Fitch also revised its assessment of NEDC's Standalone Credit Profile (SCP) to 'bb+' from 'bb' following the finalization of the reorganization of most distribution and supply companies in Oman. The higher SCP reflects a stronger business risk profile supported by larger scale, a near monopoly in electricity distribution across Oman, a supportive regulatory framework, and lower expected FFO net leverage in the next four years. We assume that the company will shortly refinance the bridge financing, now that the reorganization is complete, the ratings agency said.
“Fitch rates NEDC using its government-related Entities (GRE) criteria. However, as the SCP of NEDC at present equals the sovereign rating of Oman (BB+/Stable), the GRE application does not affect the IDR,” it added.
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