MARC has reaffirmed the AAAID long-term rating, with Stable Outlook, 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 strong backing from its ultimate shareholder, Petroliam Nasional Berhad, 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.

The rating, however, is limited by the weak financial performance of the company, despite showing operating profits for the first time during the last financial year as a result of the increase in demand.

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 the 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.

Plant 1 achieved a higher load factor of 37.8% in FY2006 as opposed to 28.4% in FY2005 as total consumption increased from the government buildings, even though peak capacity utilisation in FY2006 decreased to 13,600 Refrigeration Tonnage (“RT”) compared to 20,400RT achieved in FY2005. At the same time, Plant 2 in FY2006 registered a peak capacity utilisation of 17,400RT (FY2005: 18,810RT) on the back of available capacity of 17,700RT. Plant 2’s load factor declined to 19.7% (FY2005: 21.4%) during the year because of the lower chilled water offtake from the customers due to the delay from commercial supply in precincts 2, 3 and 4. The Wisma Putra plant, which supplies chilled water supply to the Foreign Ministry, achieved a peak capacity of 2,200RT in FY2006. The plant’s load factor of 15.9% in FY2006 had declined from 17.1% in FY2005. Lastly, the stand-alone chiller plant of 3,880RT for the Putrajaya International Convention Centre registered a load factor of 20.4% in FY2006, which increased from 18.2% in FY2005.

GDC Putrajaya continued to rake in higher revenue for FY2006, posting a growth of more than 50%. Contribution from the demand charge (based on a predetermined contractual cooling load demand) made up about 66% of total revenue. The significant top line growth has managed to outpace the growth in the cost of sales resulting in the company recording positive operating profit of RM19.1 million in FY2006 compared to an operating loss of RM4.3 million in FY2005. The first time profit was on the back of increasing businesses experienced by the company from Plant 1 and 2 in FY2006following the complete migration of all government departments and agencies.