RAM Ratings has reaffirmed the AA3/Stable rating of Jimah Energy Ventures Sdn Bhd’s (JEV or the Company) RM4.85 billion Senior IMTN Facility (2005/2025).

Published on 25 Jan 2017.

RAM Ratings has reaffirmed the AA3/Stable rating of Jimah Energy Ventures Sdn Bhd’s (JEV or the Company) RM4.85 billion Senior IMTN Facility (2005/2025). The reaffirmation of the rating is premised on JEV’s strong cashflow profile as a result of a better operational performance subsequent to rectification works on the economisers at its plant. Additionally, JEV had, during the review period, managed to fully pass through its fuel cost to Tenaga Nasional Berhad (TNB), the Company’s sole off-taker. We derive further comfort from the sturdy credit profile of TNB, whose debt issue is rated AAA/Stable by RAM. JEV is an independent power producer (IPP) that owns and operates a 1,400-MW coal-fired power plant (the Plant) in Port Dickson, Negeri Sembilan, under a 25-year Power Purchase Agreement with TNB.

JEV registered a strong finance-service coverage ratio (FSCR) of 2.03 times (with cash balances, post-distribution, calculated on payment dates) on the last principal repayment date of the Senior IMTN (11 November 2016), that fell within our expectations. Going forward, the Company is expected to register a minimum FSCR (with cash balances, post-distribution, calculated on payment dates) of 1.50 times throughout the tenure of the facility. The FSCR of 1.50 times also meets RAM’s threshold for AA3-rated transactions.

Meanwhile, a major overhaul of both Units 1 and 2 of the Plant in CY 2015 to facilitate modification works on its economisers, had led the Company to record reduced available capacity payments and daily utilisation payments amounting to RM32.95 million and RM22.72 million in CY 2015 and 9M CY 2016, respectively. However, the reduced payments from TNB are not anticipated to have any financial impact on JEV as the Company is expected to be compensated by the operations and maintenance service provider, Jimah O&M Sdn Bhd.

As with other IPPs, JEV remains exposed to regulatory and single-project risks.

Analytical contact

Adeline Poh

(603) 7628 1021

adeline@ram.com.my

Media contact

Padthma Subbiah

(603) 7628 1162

padthma@ram.com.my