Monday, Jun 28, 2004
MARC has assigned AA+ID to Kapar Energy Ventures Sdn Bhd’s (KEV) proposed RM3,402 million Bai Bithaman Ajil Islamic Debt Securities (BaIDS). The accorded rating reflects the project’s stable and predictable cash flow supported by the contracted capacity payments as well as the credit strength of the off-taker cum majority shareholder, Tenaga Nasional Bhd (TNB). TNB carries an issuer rating of AA+ from MARC reflecting the utility’s near-monopolistic position in the transmission and distribution of electricity and majority government ownership.
Incorporated in 2000, KEV is a special purpose entity established to acquire the Stesen Janaelektrik Sultan Salahuddin Abdul Aziz Shah or Kapar Power Station (KPS). KEV is currently a wholly-owned subsidiary of Malakoff Berhad (MB). Pursuant to the Asset Sale Agreement (ASA) dated 31 July 2000 entered into between TNB and KEV, KEV has agreed to acquire the Assets from TNB. Upon completion of the acquisition of KPS, the issued and paid-up capital of KEV shall be increased to RM2.0 million, with TNB and MB holding 60% and 40% of the share capital respectively.
KPS, which started operations in 1985, is a multi-fuel thermal power station with 2,420 MW nominal capacity (four Generating Units), operating on three primary fuels, namely coal, natural gas and oil and a standby fuel, distillate, for the gas turbines.
KEV’s revenue is derived from the capacity and energy payments received from TNB. On average, capacity payment (CP) constitutes 48.6% of the total revenue, forming a stable stream of cashflow, and are sufficient to cover KEV’s fixed operating costs, principal and interest payments. Meanwhile, energy payment (EP) is dependent on the sale of electrical energy which hinges on the demand from TNB to dispatch from this plant. EPs are designed to cover fuel costs and variable costs associated with energy production.
Fuel supply risk is mitigated on the back of the long term supply agreements entered with TNB and its subsidiary, TNB Fuel Services Sdn Bhd (TFS). Fuel is the single largest cost component and represents a pass-through cost to TNB.
Profitability and future cashflows are projected to be steady during the tenure of the programme driven by the contracted CP and stable operating costs. The requirement to maintain a minimum amount equivalent to the next six months principal and profit payments (either in Finance Payment Account or Finance Service Reserve Account) at all times provides a buffer to cover any shortfall in operating cashflows to meet the debt obligations.
Incorporated in 2000, KEV is a special purpose entity established to acquire the Stesen Janaelektrik Sultan Salahuddin Abdul Aziz Shah or Kapar Power Station (KPS). KEV is currently a wholly-owned subsidiary of Malakoff Berhad (MB). Pursuant to the Asset Sale Agreement (ASA) dated 31 July 2000 entered into between TNB and KEV, KEV has agreed to acquire the Assets from TNB. Upon completion of the acquisition of KPS, the issued and paid-up capital of KEV shall be increased to RM2.0 million, with TNB and MB holding 60% and 40% of the share capital respectively.
KPS, which started operations in 1985, is a multi-fuel thermal power station with 2,420 MW nominal capacity (four Generating Units), operating on three primary fuels, namely coal, natural gas and oil and a standby fuel, distillate, for the gas turbines.
KEV’s revenue is derived from the capacity and energy payments received from TNB. On average, capacity payment (CP) constitutes 48.6% of the total revenue, forming a stable stream of cashflow, and are sufficient to cover KEV’s fixed operating costs, principal and interest payments. Meanwhile, energy payment (EP) is dependent on the sale of electrical energy which hinges on the demand from TNB to dispatch from this plant. EPs are designed to cover fuel costs and variable costs associated with energy production.
Fuel supply risk is mitigated on the back of the long term supply agreements entered with TNB and its subsidiary, TNB Fuel Services Sdn Bhd (TFS). Fuel is the single largest cost component and represents a pass-through cost to TNB.
Profitability and future cashflows are projected to be steady during the tenure of the programme driven by the contracted CP and stable operating costs. The requirement to maintain a minimum amount equivalent to the next six months principal and profit payments (either in Finance Payment Account or Finance Service Reserve Account) at all times provides a buffer to cover any shortfall in operating cashflows to meet the debt obligations.