Rating Release

Agusto & Co. hereby assigns a Bbb+ rating to Paras Energy and Natural Resources Development Limited

The rating expires on 30 June 2024.

Agusto & Co. hereby assigns a Bbb+ rating to Paras Energy and Natural Resources Development Limited (“PENRDL” or “the Company” or “Paras Energy”). The rating reflects the Company’s satisfactory financial condition characterised by good profitability, satisfactory cash flow, low leverage and a stable and experienced management team. Agusto & Co has also taken into consideration Paras Energy’s export-centered business operations which provides significant upsides in periods of foreign currency volatilities and immunity from unreflective tariffs that continue to plague the domestic electricity market. However, the rating is constrained by significant intercompany balances which have the potential to constrain liquidity and the adequacy of working capital as well as a concentrated customer base.

Paras Energy is the electricity generating business of the Africa Industrial Group – a conglomerate with over 51 years of operations in Nigeria and interests across the mining, decoratives, farming, power and logistics industries. The Company is licensed by the National Electricity Regulatory Commission (NERC) to produce 96MW of grid-connected electricity. Paras Energy’s output is solely for exports and sold to a singular customer in the neighbouring Republic of Benin- the Societe Beninoise d’Energie Electrique (SBEE). The Company’s energy export to the Republic of Benin is estimated to account for c.34% of the country’s electricity consumption, which makes Paras Energy a critical infrastructure supplier. Going forward, the Company intends to expand its current customer base to include the Republic of Togo and corporate businesses in Nigeria – under the captive model.

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.