Oman’s EHC seeks $520mn in loans
Oman's state-owned Electricity Holding Co (EHC) aims to raise RO200 million ($520 million) in long-term loans to finance two of its units, its top official said, as the sultanate looks to outside sources of investment funds
Oman's state-owned Electricity Holding Co (EHC) aims to raise RO200 million ($520 million) in long-term loans to finance two of its units, its top official said, as the sultanate looks to outside sources of investment funds.
The company, which holds the government's stake in nine companies engaged in the generation, transmission and distribution of electricity and related water services, will use the funds to support Majan Electricity Co (MEC) and Dhofar Power Co (DPC), the executive said.
A non-Opec oil exporter, Oman has smaller energy and fiscal reserves than its wealthy Gulf neighbours, forcing both the government and state entities to consider outside sources of funding to a greater extent than before to cope with the impact of lower oil prices, according to Reuters.
EHC had just started the process of raising the funds, which would have a maturity of 10 years, Omar Al-Wahaibi, chief executive, told Reuters.
He did not specify how much would go to each entity but noted EHC had recently completed fundraising for three other operations: Oman Electricity Transmission Co (OETC), Muscat Electricity Distribution Co and Mazoon Electricity Co.
MEC manages power networks in some of Oman's regions, while DPC generates, transmits, distributes and supplies electricity in the Salalah region in the southwest of the sultanate.
The government raised a $1 billion loan from banks earlier this year, while Petroleum Development Oman will borrow from abroad to finance its projects.
OETC raised a $1 billion bond in April.
EHC had previously depended on short-term loans but started targeting longer-term borrowings from banks last year, Wahaibi said, speaking after three sources aware of the matter told Reuters MEC was seeking a 10-year amortising loan which would effectively mature in seven years.
Under an amortising structure, the borrower repays the loan during its lifetime and doesn't just service interest payments.
The loan transaction was indicated to carry an interest rate in the region of 3.5 percent above the London interbank offered rate (LIBOR) and could close as soon as the end of March, the sources added.
Asked about pricing, Wahaibi said it would be up to the market to decide what interest rate the loan carried. EHC has appointed JP Morgan and Bank Muscat to arrange the loans, he add