2 weeks Ago By Qatar Tribune
Qatar tribune Tribune News Network Doha S&P Global Ratings has assigned an ‘A’ issuer credit rating to the Gulf Cooperation Council Interconnector Authority (GCCIA), emphasising its strong ownership by GCC member states and the high likelihood of financial support in times of distress. This rating underscores GCCIA’s critical role in ensuring regional electricity security and its robust financial structure, which mitigates operational risks. GCCIA operates under a cost pass-through framework, allowing it to recover any budget variances within a year.
This mechanism helps maintain financial stability by ensuring that operational costs are effectively managed. About 85 percent of its revenue comes from shareholder payments, which reduces financial uncertainty. The remaining 15 percent comes from the authority’s recent expansion into Iraq, an endeavor considered riskier due to geopolitical and economic factors.
The authority is planning a significant expansion of its network, with investments estimated between $1.1 billion and $1.3 billion from 2025 to 2027.
These projects, however, will be entirely debt-funded, which could exert pressure on GCCIA’s credit metrics in the near term. Despite this, the authority’s financial structure and expected support from GCC states are expected to keep its overall stability intact. S&P has assigned GCCIA a ‘bb’ stand-alone credit profile (SACP), which has been uplifted by six notches to ‘A’ due to Saudi Arabia’s strong financial backing.
The rating reflects GCCIA’s strategic importance in the region and the expectation that the GCC states would intervene if necessary to maintain the authority’s financial health. The stable outlook for GCCIA indicates that S&P expects continued financial and strategic support from GCC states, ensuring that the authority remains on track with its planned expansion while maintaining financial discipline. As GCCIA progresses with its infrastructure projects, it will continue to play a vital role in strengthening regional electricity security and enhancing cross-border energy cooperation.
Given the authority’s unique position and backing from member states, GCCIA is well-placed to navigate the challenges associated with its debt-funded expansion while ensuring long-term operational and financial sustainability. Copy 30/03/2025 10.
