KUALA LUMPUR, Dec 21 — RAM Ratings Services Bhd has reaffirmed the AA3/Stable rating of Edra Energy Sdn Bhd’s Sukuk Wakalah of up to RM5.09 billlion in nominal value (2018/2038).
The reaffirmation took into account Edra Energy’s sufficient liquidity to weather the six-month construction delay faced by its 2,242 MW combined-cycle, gas turbine (CCGT) power plant in Alor Gajah, Melaka and a higher-than-expected tax payment due to the reinstatement of the sales and service tax in September 2018.
The rating agency said as at Sept 27, the overall project completion as reported by the engineering, procurement, construction and commissioning (EPCC) consortium stood at 96.98 per cent—behind the targeted 99.42 per cent.
“With no variation order to date, the project’s pre-funded contingency sum (4.2 per cent of EPCC cost) and the liquidity buffer derived from prudent cost management will help cushion any adverse cashflow impact.
“Moreover, Edra Power Holdings Sdn Bhd (rated AA1/Stable) -- Edra Energy’s immediate and sole holding company—has executed a Letter of undertaking (LoU) to irrevocably and unconditionally ensure that the company receives liquidity support to maintain the Sukuk rating,” said RAM Ratings in a statement today.
It said on the ground of a force majeure arising from the nationwide movement control order, the EPCC consortium has submitted a claim to Tenaga Nasional Bhd (TNB) to extend the agreed Scheduled Commercial Operation Date (SCOD) of the plant by up to 5.9 months.
RAM Ratings said while TNB has provided an interim extension of time, the period granted is shorter than that sought.
“We understand that TNB’s final decision on the extended SCOD under the Power Purchase Agreement (PPA) can only be made upon the completion of each generating block (GB).
“We highlight that any LD payable to TNB under the PPA for delays in plant completion will be contractually borne by the EPCC consortium, if the company can demonstrate the delay is caused by the latter, as specified under the EPCC contract,” it noted.
Overall, it sees Edra Energy to generate strong cashflow after the completion of the plant.
This, coupled with Edra Power’s commitment to support the company via the LoU, will lead to a minimum annual finance service coverage ratio of 1.5 times throughout the tenure of the Sukuk.
The plant will consist of three single-shaft CCGT GBs, with a nominal capacity of 747 MW each.
The respective targeted SCODs of GBs 1, 2 and 3 have been revised to June 7, Aug 22 and Oct 18, respectively, from original Jan 1, March 1 and and May 1, 2021. — Bernama
