Rating Release
Agusto & Co. hereby affirms the “Bbb+” rating assigned to GEL Utility Limited
The rating expires on 30 June 2024.
Agusto & Co. hereby affirms the “Bbb+” rating assigned to GEL Utility Limited (“GEL Utility”, “GEL” or “the Company”). The rating reflects GEL Utility’s adequate working capital, good cash flow and moderate leverage metrics. The rating also considers the Company’s long-term “take or pay” electricity supply contract with the Nigerian National Petroleum Corporation (NNPC) which guarantees stable revenue streams as well as the minimum escrow account established and funded by the NNPC which supports its cash collections. Furthermore, the rating takes cognisance of GEL’s ongoing income diversification initiatives involving the supply of off-grid electricity to Commercial and Industrial entities which should expand its income and cash flow streams over the medium term. Nonetheless, the rating is moderated by the high interest burden and persisting inflationary pressures, which continue to depress GEL’s profitability metrics.
GEL Utility Limited is a member of the Genesis Energy Group, incorporated as a private limited liability company in September 2012. The Company is one of the licensed captive power plant operators in Nigeria and provides electricity to the Port Harcourt Refinery Company Limited under a 20-year Power Purchase Agreement (PPA) with the NNPC (signed in November 2013). The PPA includes a “take-or-pay” clause that requires the NNPC to pay for the energy supplied irrespective of whether the Port Harcourt Refinery is operational or not.
The opinions expressed in this rating release do not represent any investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.
