Monday, Dec 02, 2002
GDC (Putrajaya) Sdn Bhd’s (GDC Putrajaya) AAAID Islamic debt rating reflects the importance of the project to the efficient operation of the Government’s premises in Putrajaya; superior credit quality of the offtakers (that is, the Government and Putrajaya Holdings Sdn Bhd (PJH)); and the strong backing of the ultimate shareholder, PETRONAS.
GDC Putrajaya, a company under the PETRONAS group, was incorporated to undertake the construction, operation and maintenance of a District Cooling System (DCS)/ co-generation plant to supply chilled water to all Government premises in Putrajaya, under a 22-year government concession (effective from June 1999). Besides the Government, the company had also entered into a separate agreement with PJH (Issuer rating: AAA) to supply chilled water to the latter’s buildings. With an available capacity of 25,000 Refrigerant Tonne (RT), GDC Putrajaya’s Plant 1 is able to comfortably meet the contracted peak chilled water requirement of up to 21,706 RT and 220 RT for the Government’s premises and PJH building respectively. Stage 1 of Plant 2, with an installed capacity of 5,500 RT, was recently commissioned to deliver chilled water to the Ministry of Finance buildings. A stand-alone 3,880 RT chiller plant for the Convention Centre is expected to be commissioned in mid-2003.
Chilled water is produced from the operations of the steam absorption, direct fired and electric centrifugal chillers and is then supplied to customers via underground distribution piping. Once thermally spent, the water returns to the plant to be re-chilled.
Under the offtake agreements, the tariff for chilled water incorporates a demand charge (function of contractual cooling load demand) and a variable charge (function of the actual monthly consumption). Income from demand (or capacity) charge contributed the bulk (64%) of revenue in FY2002, which surged to RM20.6 million from RM8.7 million previously with the completion of more Government offices including Wisma Putra. The demand charge lends an element of stability and predictability to the revenue base; sufficient to cover part of the fixed operating costs and to service debts. The balance (36%) of revenue was contributed by the variable charge, reflecting the current low occupancy rate of buildings, and is expected to form an increasing proportion of future revenue in line with the growing working population in Putrajaya.
Natural gas is the primary source of energy used to simultaneously produce power and steam. The gas is supplied by PETRONAS under a 15-year agreement, that will be automatically renewed on a yearly basis thereafter. Electricity, a major feedstock cost component, is imported from Tenaga Nasional Berhad. Any increase in the cost of utilities will be somewhat compensated by the 9% escalation in tariff, provided for under the offtake agreements, at every three-year interval.
The operation and management of the plant is undertaken by the parent company, Gas District Cooling (M) Sdn Bhd. Operational risk is considered low given that the DCS equipments are technically, technologically and commercially proven. The availability and service life of the project assets are supported by appropriate operating policies for preventive maintenance and spares availability.
Revenue is expected to increase in FY2003 arising from the partial commissioning of Plant 2. The company’s cash flow position will nevertheless be tight during the first three years of the BaIDS facility due to the significant funding requirement for the construction of the remaining stages of Plant 2 and the stand-alone chiller plant for the Convention Centre. Liquidity risk under the transaction is mitigated through the maintenance of RM4.5 million in cash reserve. Debt leverage is presently low at 0.3 times, and under the issue structure, drawdown on the facility is subject to an equivalent backing of equity i.e. on a 50:50 basis. The project benefits from the backing of PETRONAS as the ultimate shareholder of GDC Putrajaya given its importance in the development of the Federal Government Administrative Centre in Putrajaya.
GDC Putrajaya, a company under the PETRONAS group, was incorporated to undertake the construction, operation and maintenance of a District Cooling System (DCS)/ co-generation plant to supply chilled water to all Government premises in Putrajaya, under a 22-year government concession (effective from June 1999). Besides the Government, the company had also entered into a separate agreement with PJH (Issuer rating: AAA) to supply chilled water to the latter’s buildings. With an available capacity of 25,000 Refrigerant Tonne (RT), GDC Putrajaya’s Plant 1 is able to comfortably meet the contracted peak chilled water requirement of up to 21,706 RT and 220 RT for the Government’s premises and PJH building respectively. Stage 1 of Plant 2, with an installed capacity of 5,500 RT, was recently commissioned to deliver chilled water to the Ministry of Finance buildings. A stand-alone 3,880 RT chiller plant for the Convention Centre is expected to be commissioned in mid-2003.
Chilled water is produced from the operations of the steam absorption, direct fired and electric centrifugal chillers and is then supplied to customers via underground distribution piping. Once thermally spent, the water returns to the plant to be re-chilled.
Under the offtake agreements, the tariff for chilled water incorporates a demand charge (function of contractual cooling load demand) and a variable charge (function of the actual monthly consumption). Income from demand (or capacity) charge contributed the bulk (64%) of revenue in FY2002, which surged to RM20.6 million from RM8.7 million previously with the completion of more Government offices including Wisma Putra. The demand charge lends an element of stability and predictability to the revenue base; sufficient to cover part of the fixed operating costs and to service debts. The balance (36%) of revenue was contributed by the variable charge, reflecting the current low occupancy rate of buildings, and is expected to form an increasing proportion of future revenue in line with the growing working population in Putrajaya.
Natural gas is the primary source of energy used to simultaneously produce power and steam. The gas is supplied by PETRONAS under a 15-year agreement, that will be automatically renewed on a yearly basis thereafter. Electricity, a major feedstock cost component, is imported from Tenaga Nasional Berhad. Any increase in the cost of utilities will be somewhat compensated by the 9% escalation in tariff, provided for under the offtake agreements, at every three-year interval.
The operation and management of the plant is undertaken by the parent company, Gas District Cooling (M) Sdn Bhd. Operational risk is considered low given that the DCS equipments are technically, technologically and commercially proven. The availability and service life of the project assets are supported by appropriate operating policies for preventive maintenance and spares availability.
Revenue is expected to increase in FY2003 arising from the partial commissioning of Plant 2. The company’s cash flow position will nevertheless be tight during the first three years of the BaIDS facility due to the significant funding requirement for the construction of the remaining stages of Plant 2 and the stand-alone chiller plant for the Convention Centre. Liquidity risk under the transaction is mitigated through the maintenance of RM4.5 million in cash reserve. Debt leverage is presently low at 0.3 times, and under the issue structure, drawdown on the facility is subject to an equivalent backing of equity i.e. on a 50:50 basis. The project benefits from the backing of PETRONAS as the ultimate shareholder of GDC Putrajaya given its importance in the development of the Federal Government Administrative Centre in Putrajaya.