GCCIA commits $1.3 billion for grid expansion by 2027

Project News | Apr 02, 2025 | Zawya

GCCIA commits $1.3 billion for grid expansion by 2027

The Gulf Cooperation Council Interconnection Authority (GCCIA) intends to invest up to $1.3 billion between 2025 and 2027 to expand its regional grid, a move expected to pressure its credit metrics due to the plan being fully debt-funded. Financing is anticipated to come from local development banks in Kuwait, Qatar, and the UAE. Expected expenditures range from $1.1 to $1.3 billion for the network expansion, potentially reaching $1.5 billion with the backbone expansion project. S&P Global Ratings indicates that GCCIA's net debt could peak at $800 to $850 million by 2026-2027. The investment is vital for increasing electricity security for GCC countries, supported by over 2,000 emergency cases in 15 years. S&P has rated GCCIA 'A' for issuer credit, underscoring strong expected support from GCC members, primarily from major shareholder Saudi Arabia.

Sectors

  • Energy & Utilities
  • Finance & Investment

Geography

  • Gulf Cooperation Council (GCC) region – The article centers around the GCCIA, which operates within and is supported by the GCC countries, including Kuwait, Qatar, UAE, and Saudi Arabia.
  • Saudi Arabia – Saudi Arabia is a major shareholder and support provider for GCCIA, playing a pivotal role in its operations and expansion strategy.

Industry

  • Energy & Utilities – The article discusses the expansion of energy infrastructure, specifically electricity supply networks in the Gulf region.
  • Finance & Investment – The plan for grid expansion is fully debt-funded, involving financing from local development banks, which is integral to the financial structuring discussed in the article.

Financials

  • $1.3 billion – Planned investment by GCCIA for regional grid expansion from 2025 to 2027.
  • $1.5 billion – Potential total investment if the funding for the backbone expansion project is secured.
  • $800 million - $850 million – Expected peak net debt for GCCIA by 2026-2027.
  • $500 million – Expected negative free operating cash flow for GCCIA in 2025.

Participants

NameRoleTypeDescription
Gulf Cooperation Council Interconnection Authority (GCCIA)Target companyCompanyGCCIA is responsible for the electricity interconnection between GCC countries, managing network expansions to enhance regional power security.
S&P Global RatingsRatings agencyCompanyS&P Global Ratings provides the credit rating and financial analysis for GCCIA's investment plans.
Saudi ArabiaBiggest shareholder and supporterStateAs the biggest shareholder, Saudi Arabia is crucial in supporting GCCIA's strategic and financial initiatives.
Development banks of Kuwait, Qatar, and UAEFinanciersCompanyThese banks are expected to provide the necessary financing for GCCIA's network expansion project.