Muscat – Fitch Ratings has upgraded OQ Group’s long-term issuer default rating (IDR) to ‘BBB-’ from ‘BB+’, with a stable outlook. The upgrade follows a similar action on Oman’s sovereign rating on December 8, the rating agency said.
In its rating action statement, Fitch said OQ’s ‘BBB-’ rating is equalised with the sovereign rating of Oman and aligned with its Standalone Credit Profile (SCP) of ‘bbb-’.
“OQ’s rating is equalised with that of Oman due to the strong linkage under Fitch’s Government-Related Entities (GRE) rating criteria. We assess decision-making and oversight, and precedents of support, as ‘strong’, and the preservation of government policy role and contagion risk as ‘very strong’. This results in a support score of 50 out of a maximum of 60,” Fitch said.
The agency noted that OQ’s SCP of ‘bbb-’ reflects low leverage with headroom for growth investments, a developing but generally conservative financial policy, and a strong operational track record of major assets. These strengths are partly offset by the company’s concentration of operations in Oman, it added.
Fitch recognised that OQ accounts for a substantial portion of the assets transferred to the Oman Investment Authority (OIA) from the Ministry of Finance in 2020. “The government exercises strong influence over OQ’s business and funding strategy through OIA. The state has no plans to privatise OQ, but we expect the disposal of minority stakes in its subsidiaries, including core operating companies, to continue,” the agency said.
Fitch also noted that OQ has historically received equity injections, asset transfers and debt guarantees from the government. “The state has opted for balanced dividends, allowing excess cash flows to be allocated to capital expenditure and partial debt prepayments. The company has not required direct financial support, given its low leverage,” it added.
The agency highlighted that the preservation of OQ’s government policy role is assessed as ‘very strong’, as the group is the main downstream company and owner of all domestic refining assets producing transport fuels in Oman, as well as the exclusive operator of the country’s natural gas transportation infrastructure.
Renewable energy champion
Fitch said OQ is also the national champion for renewable energy. OQ Alternative Energy (OQAE), a subsidiary of OQ Group, has been appointed by the government as the national champion for clean energy and green hydrogen, and is the main developer of Oman’s alternative energy projects.
“OQAE has established a renewable energy pipeline of up to 7GW across Oman, including wind and solar projects, and we expect investments to ramp up over the next five years. The subsidiary is advancing five wind and two solar projects, totalling 1.8GW, and we expect further details on capital expenditure for clean energy as well as final investment decisions on these projects,” Fitch said.
As of June 2025, OQ had around RO2.5bn in readily available cash and cash equivalents, along with an undrawn committed revolving credit facility of RO384mn at the holding company level, Fitch said.
“We expect OQ to retain a substantial cash balance from its IPO proceeds to fund upcoming capital expenditure in green energy. We expect the group to generate negative free cash flow in 2025 following a substantial dividend payment and the start of the investment phase for green energy projects,” the agency added.
