RAM Rating Services Sdn Bhd (“RAM Rating”) has reaffirmed the AA1/stable rating of Teknologi Tenaga Perlis Consortium Sdn Bhd’s (TTPC or the Company) RM835.0 Million Sukuk Murabahah (2013/2023). The rating reflects the Company’s sturdy business profile, underscored by the strong terms of its Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB), its plant’s laudable operational track record, as well as the Company’s robust debt-servicing ability.
Under the PPA, TTPC is entitled to earn full available capacity payments (ACPs) irrespective of the quantum of electricity generated, subject to meeting certain performance requirements. On top of that, the IPP is allowed to fully pass through its fuel costs to TNB based on the formula for energy payments in the PPA on the condition that the power plant operates within the allowable heat-rate requirements.
TTPC’s rating is also fuelled by its commendable operating performance. Since commissioning, the power plant in Perlis has been meeting all the performance requirements under the PPA to earn full ACPs and has been able to fully pass through the fuel costs each year.
In addition, TTPC’s finance service cover ratio remained high at 7.49 times for the financial year ended 30 September 2013. RAM Rating expects TTPC to maintain its strong debt-servicing ability with an average annual pre-financing cashflow of approximately RM210.0 million throughout the tenure of the Sukuk. Meanwhile, similar to other IPPs, TTPC’s rating remains moderated by its exposure to regulatory and single-projected risks.