RAM Ratings has reaffirmed the AA3/Stable rating of Prai Power Sdn Bhd’s (Prai Power or the Company) RM780 million Al-Istisna’ Fixed-Rate Serial Bonds (2001/2016) (the Bonds).

Published on 01 July 2014

RAM Ratings has reaffirmed the AA3/Stable rating of Prai Power Sdn Bhd’s (Prai Power or the Company) RM780 million Al-Istisna’ Fixed-Rate Serial Bonds (2001/2016) (the Bonds). Prai Power owns and operates a 350-MW combined-cycle, gas-turbine (CCGT) power plant in Prai, Penang (the Plant).
The rating remains supported by Prai Power’s sturdy business profile, underscored by the favourable terms of its power purchase agreement with Tenaga Nasional Berhad (TNB). Despite the Plant breaching the unscheduled outage rate limit of 4% and Prai Power’s failure to comply with a despatch instruction in 2013, the Company’s net available capacity loss only accounted for a minute 0.6% of the Company’s topline. Meanwhile, Prai Power achieved a finance service cover ratio (FSCR) of 1.46 times (with cash balances, post distribution) as at its last principal repayment date of 26 February 2014 (including opening cash balance). Based on RAM’s sensitised cashflow projections, the Company is envisaged to register FSCRs of 1.69 times and 1.50 times (with cash balances, post-distribution) on the respective principal repayment dates of 26 February 2015 and 26 February 2016. We have assumed that it will optimise annual distributions, subject to adhering to its financial covenants throughout the tenure of the Bonds (i.e., on a forward-looking basis). 
We remain cognisant of the Plant’s vulnerability to breakdowns, as has occurred in the past, due to the utilisation of a single-shaft system that can shut down the entire facility should any component attached to the generator (i.e., the gas turbine or steam turbine) be disrupted. As with other IPPs, Prai Power is exposed to regulatory and single-project risks.

Media contact
Chinthamani Thanneermalai
(603) 7628 1013
chinthamani@ram.com.my