KUALA LUMPUR (MAY 20): Malaysian Rating Corp Bhd has upgraded Kimanis Power Sdn Bhd’s (KPSB) RM650 million sukuk programmes rating to AAIS from AA-IS, with a stable outlook.
In a statement today, MARC said the rating action was premised on the consistently strong operational performance of KPSB’s 285-megawatt combined-cycle gas-fired power plant in Kimanis Bay, Sabah.
“It has enabled the plant to meet the requirements under the power purchase agreement (PPA) and is reflected by the plant’s good outage, availability and heat rate performances since 2015.
“The [rating] upgrade also considers the workability of KPSB’s self-operating model, which has been adopted since September 2017 and backed by technical support from its ultimate parent Petroliam Nasional Bhd (Petronas),” MARC said.
The domestic credit rating institution added that the trimming of KPSB’s borrowing from the initial RM1.16 billion from the project’s inception to the current RM648.7 million as at end-2020, and the steadily amortising schedule of its sukuk series, further supports the rating action.
However, MARC noted that the rating remains underpinned by KPSB’s 21-year PPA, under which the demand risk is allocated to the offtaker Sabah Electricity Sdn Bhd (SESB), an 83%-owned subsidiary of Tenaga Nasional Bhd (TNB). The credit strength of Petronas Gas Bhd (PGB), which holds a 60% stake in KPSB, and the mitigation of gas supply risk through the long-term gas sale agreement between KPSB and Petronas, are also positive factors.
“In 2020, KPSB recorded an unplanned outage rate (UOR) of 1.1%, well within the PPA’s limit of 4%. The plant was able to fully pass through its fuel costs on the back of good heat rate performance by its three generating blocks. On the back of the strong performance during the period, KPSB received full capacity payments of RM202.4 million. Excluding unrealised losses on its foreign exchange hedge, KPSB recorded higher pre-tax profit of RM101.7 million (2019: RM85.5 million) due to lower administrative expenses as well as financing costs,” the rating agency noted.
“It has sufficient liquidity, with a healthy cash balance of RM146.5 million that can meet its upcoming sukuk profit payments and principal repayments totalling RM98.1 million in 2021,” MARC added.
