Muscat – Fitch Ratings has upgraded Oman Electricity Transmission Company’s (OETC) long-term foreign- and local-currency issuer default ratings (IDRs) to ‘BBB-’ from ‘BB+’. The outlook for OETC ratings is stable, the agency said.

Fitch has also upgraded OETC’s senior unsecured rating to ‘BBB-’ from ‘BB+’.

The upgrade reflects Fitch’s incorporation of a one-notch uplift to OETC’s standalone credit profile (SCP) of ‘bb+’, following a revision of its assessment of government support to ‘Strong’ from Oman, up from ‘Moderate’.

Fitch said the change reflects shareholders’ commitment to support OETC’s financial profile during a period of elevated capital expenditure, underlined by significant equity injections in 2025–2026 and reduced dividend distributions.

‘OETC’s rating reflects its position as Oman’s national transmission system operator with a supportive regulatory framework. This is offset by high leverage, forecast deeply negative free cash flow (FCF), and substantial liquidity requirements over the next three years due to large expansionary capital expenditure,’ Fitch said.

Fitch noted that OETC’s assets have not been affected by the Iran conflict and that its key supply routes are not critically dependent on the Strait of Hormuz, as Oman’s main ports are located on the Gulf of Oman and the Indian Ocean.

‘We believe OETC can withstand limited access to international debt markets while the Iran conflict persists, as it can secure short-term bridge financing from local banks and refinance once market conditions improve,’ the agency said.

Fitch added that OETC’s capital expenditure programme for 2026–2030 has increased substantially to around RO1.285bn, compared with RO977mn in the previous 2025–2029 plan.

‘This is mainly driven by the addition of battery energy storage system (BESS) projects valued at RO376mn, scheduled for completion by June 2026. The remaining capex is slightly lower on a rolling basis due to progress on certain projects, including the second phase of the North–South Interconnector. Almost all capex is expansionary, comprising new transmission lines and substations, as well as improved system connectivity,’ Fitch said.

Fitch expects OETC to play a key role in Oman Vision 2040 by supporting the country’s renewable energy targets and providing infrastructure to enable a more competitive business environment.

According to Fitch, OETC views BESS as a strategic initiative that will support greater renewable energy penetration and enhance system reliability, in line with Oman Vision 2040. The Authority for Public Services Regulation has also approved faster asset recovery terms for the company’s battery projects, reducing the recovery period to 10 years compared with the typical 35-year asset life, the agency added.