KUALA LUMPUR: RAM Rating Services Bhd (RAM Ratings) has affirmed the AA/Stable rating of Tanjung Bin Power Sdn Bhd’s RM4.5 billion sukuk ijarah programme given the company’s 2,100-megawatt (MW) coal-fired power plant’s satisfactory operating performance.
In a statement today, RAM Ratings said that the strong business profile of Tanjung Bin Power was supported by its favourable power purchase agreement (PPA) with sole off-taker Tenaga Nasional Bhd (TNB). “However, regulatory and single-project risks are inherent for the company, as with other independent power producers,” it said.
RAM Ratings highlighted that in 2022, Tanjung Bin Power experienced a slight loss in available capacity payments (ACPs) due to increased forced outages caused by boiler issues. The ACPs are derived from 85 per cent of the company’s capacity rate financial (CRF), which forms the cornerstone of its revenue. However, the company continued to earn extra daily utilisation payments underpinned by the remaining 15 per cent of its CRF.
Regarding the sukuk repayment date, RAM Ratings stated that Tanjung Bin Power’s finance service coverage ratio (FSCR) with cash balances stood at 3.43 times on Aug 16, 2022, slightly lower than projected. The decline in cash reserves was attributed to higher working capital requirements due to elevated coal prices and delayed collections in FY2022. However, it is anticipated that the moderation of coal prices will restore working capital and normalize cash reserves.
In terms of dividend payments, RAM Ratings mentioned that Tanjung Bin Power might opt to pay dividends to shareholders if it meets distribution covenants under the transaction. The company is required to maintain an FSCR (with cash balances) of at least 1.65 times after distribution. The stressed cash flow projections indicate that Tanjung Bin Power will be able to achieve the respective minimum and average annual FSCRs (with cash balances, post-distribution) of 1.65 times and 2.39 times during the tenure of the sukuk.
Bernama –
Credit: The Star : Business Feed
