According to Enefit's Finance Director, Margus Kaasik, the developments in the energy landscape have led to a situation where the generation of profit is more difficult than before. "From 2013, the European Union no longer allows the state to allocate free-of-charge CO2 quotas for electricity production. It brings about an additional cost of approximately EUR 100 million for Enefit. Growth in the environmental and resource fees and termination of the production of less expensive renewable energy in Narva also increases our production expenses and affects the competitiveness of producing electricity from oil shale. The opening of the electricity market increases our dependence on volatile exchange prices, which have been quite low for some time," commented Kaasik.
Apart from a potential decrease in the profitability of electricity production, the launch of a new oil plant also has an impact on the outlook. The agency considers oil production to be an activity that involves a higher risk because the market price of liquid fuels is more volatile than that of electricity. It is also noted that it took longer than forecast for the first oil to be produced by Enefit280.
According to Kaasik, Enefit's success has mainly been based on recent oil sales. "We have happily received the first barrel of oil shale from the new Enefit280 oil plant, which will double our current production capability. If oil prices remain high, the share of the fuels business in our financial results will grow even more owing to the completion of the new plant," said Kaasik.
Moody's does not forecast any increase of the rating within the next 12-18 months, but the rating outlook may change from negative back to stable. For this, Enefit must also retain its strong position in the free market, be profitable in the markets with open competition, and improve the liquid cash flows of the company.
Enefit has had credit ratings from Standard & Poor's, and Moody's since 2002. The currently valid credit rating Baa1 was approved by Moody's in January 2012. In September 2012, Standard & Poor's approved the credit rating of Enefit Group at the level of BBB+; the rating outlook is stable.