Fitch granted the Georgian Oil and Gas Corporation with long-term rating in foreign currency (IDR) with stable forecast on BB- level.
Previous forecast of the rating agency was B+. Fitch states that the reason for improved forecast is the new power generation business, however, small size of the company and limited operations are considered by the agency as negative factors, affecting the rating.
Fitch states that last year, 43% of the Corporation’s profit was from Gardabani thermal power plant. Just to remind you, GOGC owns 51% of Gardabani thermal power plant.
“We think it risky by the government to hand over the new investment projects to GOGC, since this is linked to major expenses. However, projects that had been implemented so far have good indicators (Namakhvani HPS) or government guarantees, which reduces the risk of affecting the Oil and Gas Corporation’s ratings”, – states the Agency. Apart from that, Fitch notes that the pressure over profitability of the gas sector is a factor, limiting the ratings.
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