Fitch Affirms Long-Term Issuer Default For Uzbekistan's Thermal Power Plants
Date
1/26/2025 5:11:13 AM
(MENAFN- Trend News Agency)
TASHKENT, Uzbekistan, January 26. Fitch Ratings
(a global credit rating agency) has affirmed the long-term issuer
default rating (IDR) of Thermal Power plants (Uzbekistan's
electricity generation company, TPP) at 'BB-' with a stable
outlook, the agency told Trend .
The rating is in sync with Uzbekistan's sovereign rating because
TPP has solid connections to the government, which backs almost all
of the company's debt or offers funding through state channels.
The affirmation reflects TPP's strategic importance as a
government-related entity, with the state owning 100 percent of its
shares and playing a direct role in its operations, including
tariff approvals and capital investments. TPP is recognized as
vital to Uzbekistan's energy sector, ensuring electricity and heat
supply while maintaining a significant market share of 20-25
percent.
However, TPP's standalone credit profile remains constrained at
'ccc,' reflecting operational challenges following the
government-mandated disposal of several large power plants, which
reduced its installed capacity to 4.5GW. Despite these challenges,
tariff adjustments in 2024 and government-backed financial support
have contributed to improved earnings. Future reforms, including
plans to liberalize the electricity market by 2026, could enhance
TPP's cash flow and competitive position.
Fitch highlighted the ongoing importance of regulatory decisions
in shaping TPP's financial performance, as nearly all revenue and
key costs, such as fuel purchases, are regulated. The company is
walking a tightrope with risks linked to high leverage, foreign
exchange exposure, and dependence on state funding. However, the
anticipated efficiency improvements and market reforms are likely
to pave the way for long-term stability.
Fitch Ratings is a global credit rating agency that assesses the
creditworthiness and financial stability of a wide range of
organizations, including corporations, banks, governments, and
other financial institutions.
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