ASTANA, Kazakhstan, February 3. Fitch Ratings has upgraded Kazakhstan Electricity Grid Operating Company's (KEGOC) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to 'BBB' from 'BBB-' with stable outlook, Trend reports.
The upgrade reflects KEGOC's revised Standalone Credit Profile (SCP) to 'bbb-' from 'bb+', combined with the application of a bottom-up plus one notch approach under Fitch's new Government-Related Entities (GRE) Rating Criteria. KEGOC's SCP is notched up once for strong links with its sole owner, the Republic of Kazakhstan (BBB/Stable), to arrive at the 'BBB' IDR.
Fitch has revised up KEGOC's SCP to 'bbb-' on a stronger financial profile and improvements in the regulatory framework following market reform introduced in June 2023. Fitch assesses 'decision-making and oversight' as 'Very Strong' because the Kazakh state is KEGOC's ultimate dominant shareholder (85% of shares) and approves its strategy and capex through its board of directors.
In addition, Fitch assesses the 'preservation of government policy role' as 'Strong', as KEGOC is a natural monopoly that runs the country's main energy infrastructure with significant development capex plans. Fitch does not see contagion risk of a KEGOC default for the state or other GREs due to its small size and almost fully domestic funding with no cross-default provisions with the state.
At the same time, Fitch expects the establishment of a single buyer of electricity and the introduction of a real-time balancing market to respectively boost revenues and reduce expenses, supporting KEGOC's financial profile.
Moreover, Fitch expects KEGOC's combined volumes from transmission services to significantly increase to around 90 billion kWh by 2027 from 54 billion kWh in 2022. The Fitch rating case forecasts an average EBITDA of 120 billion tenge a year over 2024-2027 compared with previously projected 83 billion tenge a year over 2023-2026.
