MARC has reaffirmed the AAAID long term rating of Gas District Cooling (Putrajaya) Sdn Bhd’s (“GDC Putrajaya”) RM300 million Al-Bai’ Bithaman Ajil Islamic Debt Securities (“BaIDS”). The rating is supported by the strength of the project which in turn draws its strength from the assured demand for the supply of chilled water coming from the Government offices in Putrajaya; the integrated nature of the project owing to the strong backing from its ultimate shareholder, Petroliam Nasional Berhad (“PETRONAS”), in the form of timely and adequate capital support; as well as the minimal credit risk involved in the project since the offtakers are the Federal Government and Putrajaya Holdings Sdn Bhd.

GDC Putrajaya operates and maintains District Cooling System plants in Putrajaya and its business operation is governed by a 22-year Concession Agreement (“CA”). The CA requires GDC Putrajaya to produce and supply chilled water to Government premises located in Putrajaya. To date, GDC Putrajaya runs four main plants namely Plant 1, Plant 2, Wisma Putra plant and the Convention Centre plant.

Operationally, Plant 1 achieved a higher peak capacity level in FY2005 when it improved to 20,400RT against 15,656RT in FY2004. The higher peak capacity was achieved on the back of an increased available capacity of 27,000RT. Despite the higher peak capacity level, Plant 1’s load factor was lower because of the delay in the migration of office occupants for Parcel E government buildings. Similarly, Plant 2’s peak capacity also increased to 18,810RT (FY2004: 7,476RT), however, this increase was not matched with a proportional increase in demand resulting in a marginal decrease in the load factor. Demand growth has been relatively slow due to the delay in the migration of government departments to Putrajaya, nevertheless, demand should pick up in the near future in line with the higher migration of government departments to Putrajaya.

GDC Putrajaya recorded revenue growth of more than 50% in FY2005 and contribution from the demand charge (based on a predetermined contractual cooling load demand) made up about 76% of total revenue. During the period under review, revenue from demand charge increased substantially by 70% on the back of increasing businesses experienced by GDC Putrajaya following the rise in the number of customers. The significant top line growth outpaced the growth in the cost of sales resulting in the narrowing of the operating loss before interest and tax to RM4.3 million.

Despite the losses, PETRONAS remains committed in providing adequate financial support to GDC Putrajaya. In FY2005, GDC Putrajaya issued new ordinary shares and non-cumulative preference shares totalling RM21.3 million and RM7.1 million respectively to PETRONAS. The holding company’s involvement in providing adequate and timely financial capital ensures GDC Putrajaya’s ability in meeting the financial covenants required in the issue structure.