Published on 16 Nov 2021.
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 the Company’s power purchase agreement (PPA) with its sole offtaker, Tenaga Nasional Berhad (TNB). The commendable operating track record of the Company’s power plant and its robust debt servicing ability further support the rating.
TTPC owns and operates a 650-MW combined-cycle gas turbine power plant in Kuala Sungai Baru, Perlis (the Plant), under a 21-year PPA with TNB which will expire on 31 March 2024. Jati Cakerawala Sdn Bhd (Jati) and TNB have respective 80% and 20% stakes in the Company.
TTPC has operated within the performance limits of the PPA, earning full available capacity payments since the Plant’s commissioning. The Company has also managed to fully pass through fuel costs to TNB as a result of the Plant’s efficiency. The Plant recorded an unscheduled outage rate (UOR) of 0.9% for the first nine months of calendar year (CY) 2021, against the PPA’s limit of 6% (CY 2020: 2.2%), and is on track to fulfil the availability target requirement of 94.69% for the sixth contract year block (2019-2021).
Our sensitised cashflow projections indicate that TTPC will generate an annual pre-financing cash flow of about RM152 mil, registering strong minimum and average annual finance service coverage ratios of 1.80 times and 1.88 times (with cash balances, post distribution and calculated on principal and profit payment dates) in the final two years of the Sukuk’s tenure. TTPC also supports Jati’s RM540 mil Sukuk Murabahah (2013/2023) (rated AA3/Stable) via dividend distributions. Our cashflow analysis assumes that the Company will optimise dividend distributions while adhering to its covenants on a forward-looking basis as opposed to only in the year of assessment.
Like other independent power producers, TTPC is exposed to force majeure and regulatory risks. The Company’s comprehensive array of insurance policies mitigate these risks but the timeliness of insurance payouts would be key to minimising any cashflow disruption. As an essential service provider, TTPC’s operations have stayed largely unaffected by movement restrictions during the Covid-19 pandemic.
Lee Jo Yee
(603) 3385 2583
Chong Van Nee, CFA
(603) 3385 2482
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Ratings on Teknologi Tenaga Perlis Consortium Sdn Bhd