Muscat – Fitch Ratings has affirmed Oman Electricity Transmission Company’s (OETC) Long-Term Issuer Default Rating (IDR) at ‘BB+’ and senior unsecured rating at ‘BB+’ with a Recovery Rating of ‘RR4’. The outlook on the IDR is stable.

According to Fitch, the affirmation reflects OETC’s commensurate financial structure, despite a projected breach of its net leverage negative sensitivity in 2026, driven by high capex, before leverage improvement in 2027.

‘Our forecast incorporates shareholders’ commitment to the rating and support through equity injections and moderate dividend cuts. However, rating headroom remains very limited. Insufficient shareholder support or weaker cash flows leading to leverage consistently above its negative sensitivity would result in a negative rating action,’ Fitch said in a statement.

Fitch noted that OETC’s rating reflects its position as the national transmission system operator in Oman with supportive regulation. ‘This is offset by forecast deeply negative free cash flow and high liquidity needs over the next four years due to large expansion capex.’

As per Fitch’s statement, OETC has materially increased its capex programme to around RO840mn over 2025-2028, from around RO450mn for 2024-2027 in the previous business plan. ‘This is mainly driven by OETC’s decision to accelerate some expansion projects, including the second phase of the North-South Interconnector, before the current price control period (PC6) ends in 2026, and increased projects costs. As before, most of the capex is for expansion, with less than 5% related to maintenance,’ the rating agency said.

Fitch views the sultanate’s regulatory framework as supportive, especially compared with that in most emerging-market peers.

‘Oman has an independent, consultative and transparent system with a revenue-cap methodology largely based on prior regulatory standards in the UK. Revenue generated by OETC is subject to price controls, which are set by the Authority for Public Services Regulation,’ the rating agency added.