The reaffirmation of GDC Putrajaya Sdn Bhd’s (GDC Putrajaya) BaIDS’ rating at AAA reflects the strength of the project with assured demand for the production and supply of chilled water to Government premises in Putrajaya; minimal credit risk with the Government and Putrajaya Holdings as the main offtakers; strong financial support from its ultimate shareholder, Petroliam Nasional Berhad (PETRONAS, rated AAA) and the tried and tested technology applied in its District Cooling System (DCS) plants.

Pursuant to a restructuring exercise, Gas District Cooling (M) Sdn Bhd (GDCM), the holding company of GDC Putrajaya, disposed its entire shareholding in GDC Putrajaya to Gas District Cooling (Holdings) Sdn Bhd (GDCH), a wholly owned subsidiary of PETRONAS, making the latter the new holding company of GDC Putrajaya, effective 31 March 2004.

Governed by a 22-year concession agreement, GDC Putrajaya operates and maintains DCS plants that supply chilled water to Government premises in Putrajaya. To date, GDC Putrajaya runs four main plants namely Plant 1, Plant 2, Wisma Putra plant and the Convention Centre plant.

With the exception of the Convention Centre, all plants operationally recorded improved utilization during the fiscal year. Plant 1’s peak capacity level improved to 15,656RT (FY2003: 14,392RT) while Plant 2’s peak capacity increased to 7,476RT (FY2003: 5,421RT).

Plant 2’s increased level of capacity (from 5,500RT in FY2003 to 8,000RT in FY2004), however, was not
matched with a proportional increase in demand, resulting in a marginal decrease in the load factor. Demand growth was low due to delay in migration of government departments to Putrajaya. Demand for chilled water is nonetheless expected to improve from 2005/06 onwards, in line with higher migration of government departments to Putrajaya.

FY2004, GDC Putrajaya posted another 30% increase in revenue following the completion of stage 1 of Plant 2 as well as increased demand for chilled water supply from the existing plants. Approximately 68% of revenue for the year was contributed by demand charge (based on a predetermined cooling load demand) while the balance of 32% was contributed by variable charge (based on consumption).

Likewise, operating profit (before interest, tax and depreciation) also grew in tandem with revenue, registering a 69.2% increase. The increase, however, was offset by higher depreciation charges following the completion of new plants and substantial increase in interest costs subsequent to the drawdown of the BaIDS, making it yet another loss making year for the company. The company’s performance, however, is expected to improve from FY2006 onwards following higher migration of government departments.

PETRONAS’ commitment to provide financial support, either in the form of fresh equity injection or shareholders’ advances, ensures the company’s ability in meeting debt service in a timely manner and fulfilling the financial covenants required in the issue structure.