Latest news with #SAOC
Zawya
11-08-2025
- Business
- Zawya
Oman: Fitch affirms EDO at ‘BB+' with positive outlook
MUSCAT: Leading international credit ratings agency Fitch Ratings has affirmed the Long-Term Issue Default Rating (IDR) of Energy Development Oman SAOC (EDO) — the wholly government-owned energy sector holding company — at 'BB+' with a Positive Outlook. Fitch's 'BB+' rating sits at the very top of the non-investment-grade (speculative) category — just one notch below BBB-, the lowest investment-grade rating. Highlighting its rationale for the rating, Fitch said: 'EDO's rating is constrained by that of the government of Oman (BB+/Positive), its sole shareholder, due to their close links, in line with Fitch's Government-Related Entities (GRE) Rating Criteria; and Parent and Subsidiary Linkage (PSL) Rating Criteria. The Positive Outlook reflects that on Oman's sovereign rating'. It further added: 'The company's 'bbb+' Standalone Credit Profile (SCP) is supported by its large-scale oil and gas operations, strong and resilient cash flow generation due to contracted sale prices for gas, a flexible royalty framework and dividend policy; and low leverage'. EDO, affiliated with the Ministry of Finance, owns 60 per cent of the Block 6 Petroleum concession operated by Petroleum Development Oman (PDO) and 100 per cent of Block 6's non-associated gas concession. PDO's oil and gas production accounts for the lion's share of Oman's aggregate hydrocarbon output. In addition, EDO holds 100 per cent of Hydrogen Oman (Hydrom), the master planner of the Sultanate of Oman's green hydrogen industry. In affirming its credit rating, Fitch cited EDO's 'strong' precedents of government support. 'In 2022, the government provided a shareholder bridge facility by permitting EDO to defer dividend payouts and allowing the company to allocate its excess cash towards near-term investments. The government also established a flexible royalty regime, whereby royalties are based on average oil prices during the relevant period, allowing EDO to preserve cash flow when hydrocarbon prices are low. We expect the government to continue providing support due to EDO's pivotal role within Oman's infrastructure and economy', the ratings agency said. Additionally, Fitch underlined the pivotal contribution of EDO's Block 6 concessions to the Omani economy, the role of natural gas in fuelling growth and its position as one of the country's largest corporate employers. It added: 'EDO is the largest oil and gas producer in Oman through its interest in Petroleum Development Oman (PDO). PDO operates the onshore Block 6 oil and gas concessions, which comprise over 24 per cent of Oman's land acreage and have more than 50 years of production history. This mitigates EDO's focus on a single country of operations. We expect an average output of over 700,000 barrels of oil equivalent per day (boed) until 2028'. Fitch also expects EDO to maintain a strong financial profile through 2029 under its base-case oil and gas price assumptions, despite rising capital expenditures and high government royalties and taxes. Dividends will be paid from excess cash flow after meeting debt service, working capital needs and maintaining minimum cash levels, allowing for cash flow flexibility. Fitch forecasts EDO's EBITDA net leverage to remain below 1x from 2024 to 2029 and notes the company's target to keep net debt under 2.2x funds from operations, a board-set goal no longer included in debt covenants. Fitch's key assumptions for the issuer's rating case include Brent crude oil prices from 2025 to 2028 aligning with Fitch's base-case price forecast, gas production sold at fixed prices under existing contracts and upstream production averaging approximately 820,000 barrels of oil equivalent per day (boed) during 2025 to 2028. Capital expenditures are expected to average $4.4 billion annually over the same period, with dividend payments made in accordance with the company's financial policy. 2025 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (
Observer
03-06-2025
- Business
- Observer
Digital banks in Oman get green-light from CBO
MUSCAT, JUNE 3 The Central Bank of Oman (CBO) has issued a regulatory framework for the licensing and supervision of digital banks, marking a major step toward modernising the country's financial sector. The framework, which came into effect on June 1, 2025, is aligned with Oman Vision 2040. The framework allows digital banks to operate as either locally incorporated joint-stock companies (SAOC or SAOG) or as branches of foreign banks, subject to regulatory approval in their home jurisdictions. Two types of licenses will be offered. Category 1 requires a minimum paid-up capital of RO 30 million and allows full operations. Category 2 requires RO 10 million but comes with business limitations, including caps on customer deposits and corporate lending, and a prohibition on proprietary trading. These limits are waived during the first two years of operation. All digital banks must maintain a physical head or registered office in Oman. They may open administrative offices for customer support, but not traditional branches for transactions. Shareholding limits apply: individuals and their affiliates may hold up to 15 percent of voting shares; corporate bodies up to 25 percent; and holding companies up to 35 percent. Cross-ownership in multiple banks is restricted to 15 percent. Applicants must present a detailed five-year business plan covering digital services, target segments, profitability projections, and a financial inclusion strategy. The plan must outline IT architecture, cybersecurity readiness, and disaster recovery procedures. Digital banks are expected to adopt modern technologies such as AI, open banking, blockchain, and cloud computing. Omanisation targets start at 50 percent and rise to 90 percent by Year 5. The CBO mandates the submission of an exit plan alongside the license application. It must define conditions under which the bank would voluntarily cease operations, such as capital or profitability deterioration. The plan should address customer protection, risk triggers, and exit funding without regulatory assistance. Licensed digital banks must comply with the Banking Law 02/2025, National Payment Systems Law 08/2018, and AML Law 30/2016. They are also subject to digital onboarding rules, cybersecurity frameworks, consumer protection regulations, and fraud prevention protocols. The CBO may require independent technical assessments at the applicant's expense. Non-compliance could trigger enforcement measures, including license revocation. The CBO reserves the right to reject incomplete applications or withdraw approvals if information is found to be inaccurate.
