Rating Release

Agusto & Co. hereby affirms the ‘A-‘ rating assigned to North South Power Company Limited with a stable outlook

The rating expires on 30-06-23

Agusto & Co. hereby affirms the ‘A-‘ rating assigned to North South Power Company Limited (“North South Power”, “NSP” or “the Company”). The rating is reflective of the Company’s good cash flow position, adequate working capital, moderate leverage and stable and experienced management team. Agusto & Co. has also taken into consideration the Company’s position as a key player in the Electric Power Industry, supplying 8% of the country’s generation capacity, as well as the ability to restore (Black Start1 ) other generating companies in periods of power failure. These rating positives are however constrained by high trade receivables from the Nigeria Bulk Electricity Trading Plc (‘the Bulk Trader’ or ‘NBET’) which were outstanding for an average of 217 days in 2021. In addition, NSP’s rising and significant concession fee payable to the Bureau of Public Enterprises (BPE) since 2018, remains a key rating concern that could potentially impact the Company’s working capital management and cash flows. Nonetheless, we recognise that NSP maintains sizeable dollar cash balances to support the immediate repayment of the outstanding fees. The Company has also demonstrated the capacity to raise long-term funds from the domestic debt capital market, with two successful green bond issuances.

North South Power is a major player in the Nigerian Power Industry and the licensed operator of the 600MW Shiroro hydroelectric power plant (‘Shiroro’ or ‘the Shiroro Plant’). The Company generates and sells electricity to the distribution companies through NBET under the terms stipulated in a power purchase agreement (PPA) and in line with the electricity market rules. NSPcommenced operations in 2013, following the acquisition of the Shiroro Plant under a 30-year concession agreement with the Federal Government (FG) through the BPE and as part of the FG’s privatisation efforts.

The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.