RAM Ratings assigns preliminary AAA rating to Sabah Energy Corporation

Published on 22 May 2026.

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RAM Ratings has assigned a preliminary AAA rating to Sabah Energy Corporation Sdn Bhd’s (SEC or the Group) proposed Islamic Medium-Term Notes (Sukuk Wakalah) Programme (Sukuk or the Programme) of up to RM3.0 billion. The rating has a stable outlook. SEC was established as the Sabah-state-owned oil and gas company under Sabah Energy Corporation Enactment 1981, which was later repealed and replaced by Sabah Energy Corporation (Successor Company) Enactment 1997. SEC is wholly owned by the Sabah state government through the Chief Minister, State of Sabah.

The Sukuk’s rating is equated to Sabah’s state implicit strength, reflecting the Group’s essential role in the development of Sabah’s (Sabah or the State) energy resources. In April 2023, SEC acquired key gas pipelines located in the Kota Kinabalu Industrial Park, Kimanis, and the Sipitang Oil & Gas Industrial Park from Petroliam Nasional Berhad (PETRONAS) following the execution of a Commercial Collaboration Agreement. As the sole licensed distributor of natural gas in the State and Labuan, SEC further expanded its role by signing additional Gas Sales Agreements with PETRONAS to source and supply natural gas to all five gas-fired Independent Power Producers (IPPs) and major industrial facilities in the State.

Given SEC’s essential function in the State’s energy sector and alignment with the Sabah state government’s energy development agenda, SEC enjoys solid regulatory support from the Sabah state government as well as operational assistance to facilitate energy investments and revenue growth for the Group. Should the need arise, we expect the State to provide timely financial support, although the Group has a proven profitability track record.

The Group through its wholly owned subsidiary, Asian Supply Base Sdn Bhd (ASB) has been operating an offshore supply base in Labuan for over four decades. ASB provides support services to upstream operations in Sabah and Sarawak. The launch of the Borneo Oil and Gas (BOG) Supply Base at Bintulu Port in September 2024 poses a competitive threat to ASB’s operations. However, ASB’s established track record, strong customer relationships, and strategic partnerships may moderate this threat to some extent. Additionally, ASB’s operations are also highly exposed to fluctuations in crude oil and natural gas prices, which directly influences level of offshore activities. In the near term, oil price movements remain sensitive to ongoing geopolitical developments in the Middle East. Prolonged weakness in oil prices would negatively impact ASB’s financial performance.

The Group intends to become the State’s leading power generator. Currently, SEC is involved in power generation through its wholly owned 5 MW solar farm in Labuan, a majority shareholding in a 100 MW operational gas-fired power plant and minority shareholdings in two operational gas-fired power plants in the State. SEC is progressively strengthening its participation across Sabah’s power and renewable energy value chain through identified generation and infrastructure projects. The Group’s expanding role across gas aggregation, energy infrastructure, power generation and renewable energy development reflects SEC’s broader long-term growth and support SEC’s sustainability and lower carbon aspirations. That said, this exposes the Group to heightened operational risks, such as project delays, cost overruns and technical complexities associated with power plant development and operation.

 

Analytical contacts
Karin Koh, CFA
(603) 2708 8237
karin@ram.com.my

Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my

 

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