Agusto & Co. hereby affirms the “Bbb+” rating assigned to GEL Utility Limited
The rating expires on 30-06-23
Agusto & Co. hereby affirms the “Bbb+” rating assigned to GEL Utility Limited (“GEL” or “the Company”). The rating is reflective of the Company’s good cash flow, adequate working capital and moderate leverage metrics. Agusto & Co. has also taken into consideration the Company’s qualified and experienced management team and its long-term contracts to provide uninterrupted electricity supply to the Nigerian National Petroleum Corporation (NNPC), which guarantees stable revenue streams. Nonetheless, the rating is moderated by the Company’s revenue concentration risk given that the bulk of its income stream is from the contract with the NNPC in addition to the high inflationary pressures, which continue to depress GEL’s profitability metrics
GEL Utility Limited is a member of the Genesis Energy Group which provides off-grid electric power to consumers. The Company’s business model is hinged on building modular and industrial-style power plants while offering fuel-efficient solutions across the generation and distribution value chain of the power sector. The Company operates three power plants in Port Harcourt and Kano and provides uninterrupted electricity to the Port Harcourt Refinery Company Limited under the 20-year Power Purchase Agreement (PPA) signed in November 2013 with the Nigerian National Petroleum Corporation (NNPC). The PPA is a take-or-pay agreement that requires the NNPC to pay for the energy supplied irrespective of whether the Port Harcourt Refinery is operational or not. GEL is licensed by the Nigerian Electricity Regulatory Commission as a captive power plant operator.
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.