RAM Ratings has reaffirmed the AA1/Stable rating of Teknologi Tenaga Perlis Consortium Sdn Bhd's (TTPC or the Company) MYR 835 million Sukuk Murabahahh (2013/2023).
The rating reflects the Company's sturdy business profile, which is underscored by the favourable terms of its power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB - TTPC's sole off-taker), the steady operational track record of TTPC's plant and the Company's robust debt-servicing ability.
During the review period, TTPC had operated within the performance limits stipulated in the PPA and earned full available capacity payments (ACPs). While the power plant had faced an operational setback in April 2016, the Company had not incurred any ACP losses during the period, having managed to rectify the issue. Further, TTPC had managed to fully pass through its fuel cost to TNB.
Based on our sensitivity analysis, TTPC is expected to generate an average annual pre-financing cashflow of about MYR 216 million for the remaining tenure of the Sukuk. This translates into a strong minimum finance service coverage ratio (with cash balances, post-distribution) of 1.80 times. Our cashflow analysis has assumed 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.
As with other independent power producers, the Company's rating is moderated by inherent regulatory and single-project risks.
TTPC owns and operates a 650-MW combined-cycle, gas-turbine power plant in Kuala Sungai Baru, Perlis, under a 21-yearPPA with TNB, which expires on 31 March 2024.
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