RAM Ratings is of the view that Sarawak Energy Berhad (the Group) will be able to take on additional debt for the proposed acquisition of Sarawak Hidro Sdn Bhd

Published on 14 Mar 2017.

RAM Ratings is of the view that Sarawak Energy Berhad (the Group) will be able to take on additional debt for the proposed acquisition of Sarawak Hidro Sdn Bhd – owner and operator of the Bakun hydroelectric plant – as well as the existing debts of the acquiree, provided the Group maintains its existing planned capacity expansions. The existing debts of Sarawak Hidro after the proposed acquisition could be offset by future payment obligations to Sarawak Hidro under the power-purchase agreement between the two parties – these have already been considered by RAM as adjustments to Sarawak Energy’s debt. In addition, Sarawak Energy’s ownership of Sarawak Hidro could result in long-term savings in electricity generation cost and economies of scale, with full details pending finalisation of the proposed acquisition which was recently announced by the Sarawak Chief Minister. 

Sarawak Energy is a vertically integrated electricity group with a monopoly over the transmission and distribution of electricity in Sarawak. The Group has a RM15 billion Sukuk Musyarakah Programme (2011/2036), rated AA1/Stable by RAM. Meanwhile, Sarawak Hidro – the owner and operator of the 2,400-MW Bakun plant – is the sole independent power producer in Sarawak. Should the proposed acquisition of Sarawak Hidro be completed, Sarawak Energy will fully own all generation plants in the state. 

Analytical contact
Chin Wynn, CFA
(603) 7628 1170
chinwynn@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my