Published on 10 Sep 2020.
RAM Ratings has reaffirmed the AA1/Stable rating of Teknologi Tenaga Perlis Consortium Sdn Bhd’s (TTPC or the Company) RM835 mil Sukuk Murabahah (2013/2023). The rating reflects TTPC’s sturdy business profile, which is underscored by the favourable terms of its power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB, its sole off-taker that is rated AAA/Stable by RAM), the outstanding operating track record of the Company’s plant, and its robust debt-servicing ability.
TTPC has been operating within the performance limits under its PPA, earning full available capacity payments (ACPs) since the plant’s commissioning. As its cashflow is mainly supported by ACPs, the Company’s lower electricity sales in 1H 2020 amid the nationwide Movement Control Order (MCO) had exerted a limited impact on it. TTPC has been allowed to keep operating throughout the various stages of the MCO because power plant operations are classified as essential services. The Company has also been able to consistently and fully pass through its fuel costs to TNB, underpinned by its plant’s efficiency.
Based on RAM’s sensitivity analysis, TTPC is anticipated to generate an average annual pre-financing cashflow of about RM210 mil throughout the remaining tenure of the Sukuk. This translates into a robust minimum annual finance service coverage ratio of 1.80 times (with cash balances, post-distribution). TTPC also supports the repayment of 80%-held Jati Cakerawala Sdn Bhd’s RM540 mil Sukuk Murabahah (2013/2023) (rated A1/Stable) through dividend distributions to the latter. Our cashflow analysis assumes that TTPC will pay optimum dividends while adhering to its financial covenants throughout the Sukuk’s tenure, on a forward-looking basis as opposed to only in the year of assessment.
TTPC owns and operates a 650 MW combined-cycle, gas-turbine power plant in Kuala Sungai Baru, Perlis, under a 21-year PPA with TNB that will expire on 31 March 2024. As with other independent power producers, TTPC’s rating is moderated by inherent regulatory and single-project risks.
Irfan Afifah Mohd Zaki
(603) 3385 2551
(603) 3385 2577
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Ratings on Teknologi Tenaga Perlis Consortium Sdn Bhd