Oman Power and Water Procurement Co. SOAC assigned 'A' long-term credit rating; outlook stable

"The rating reflects OPWP's unique and strategically important role as the sole bulk buyer and bulk seller of electricity and related desalinated water in Oman and its 100% government ownership," said Standard & Poor's credit analyst Mark Davidson.

OPWP is owned by the Sultanate of Oman (A/Stable/A-1) through the Ministry of Finance and the Electricity Holding Company SOAC (EHC).

It must remain wholly owned by the government indefinitely, under Article (14) of the Law for the Regulation and Privatisation of the Electricity and Related Water Sector ("Sector Law").

Furthermore, under Article (67) of the Sector Law, the Ministry of Finance is obliged to provide adequate finance to enable OPWP to undertake its operations.

The rating of OPWP is equalized with that of the Sultanate of Oman to reflect these factors.

These strengths are modestly offset by the relatively untested regulatory framework and, over the longer term, the increase in counterparty risk as Oman's distribution companies are privatized.

"The stable outlook factors in continued strong implicit and explicit support from the Sultanate of Oman," said Mr. Davidson. "It also takes into account our expectation that the tariff regime will remain supportive, and that OPWP will not engage in any nonregulated activities without approval from the Authority for Electricity Regulation".

A change in rating or outlook would likely result from a change in the rating or outlook on the Sultanate of Oman.

Similarly, any change in the relationship between OPWP and the sovereign, or in OPWP's singular policy-based mandate, could have negative rating implications.