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The Gulf Co-operation Council Interconnection Authority (GCCIA) plans to invest up to $1.3 billion in network expansion between 2025 and 2027, a move that will strain its credit metrics as the projects are fully debt-funded, S&P Global Ratings said.
“Over 2024-2027, we expect GCCIA to invest at least $1.1-$1.3bn to expand the network and up to $1.5bn should the funding for the backbone expansion project be secured,” said Emeline Vinot, an associate at S&P Global Ratings.
The investment programme will be entirely financed through debt, with funding expected from local development banks in Kuwait, Qatar and the UAE, she added.
S&P also anticipates GCCIA will experience a negative free operating cash flow of around $500 million in 2025, before reaching free cash flow neutrality from 2027.
“As a result, we currently expect net debt to peak at about $800m-$850m in 2026-2027, decreasing to about $600m by 2029,” Ms Vinot said.
GCCIA acts as the power grid interconnector for the six-member Gulf Cooperation Council, ensuring electricity supply security in the region. It has supported national electricity transmission networks in over 2,000 emergency cases in the past 15 years.
S&P has assigned an ‘A’ issuer credit rating to GCCIA, based on expectations of timely support from GCC member states, which will drive the network expansion.
“We view the GCC countries extremely likely to support GCCIA in case of distress, notably its biggest shareholder Saudi Arabia,” Ms Vinot added.
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