Agusto & Co. affirms the ‘A-‘ rating assigned to North South Power Company Limited
The rating expires on 30 June 2023.
Agusto & Co. 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 Start) 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.
The process of restoring an electric power station or a part of an electric grid to operation without relying on the external electric power transmission network to recover from a total or partial shutdown