KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/Stable rating of Sarawak Hidro Sdn Bhd's RM5.54bil Sukuk Murabahah (2016/2031), premised on the Malaysian government's commitment to top up any shortfall in cashflow throughout its lifespan to ensure the AAA rating.
Sarawak Hidro was fully acquired by Sarawak Energy Bhd (SEB) via its unit SEB Power Sdn Bhd on Aug 16, 2017.
RAM noted that although the sole offtaker of Sarawak Hidro's electricity, Syarikat SESCO Bhd, is also a unit of SEB, it is still expected to continue paying for the electricity it consumes up to 2019.
The dispute between Sarawak Hidro and Syarikat SESCO over payments under the power purchase agreement is being resolved, and RAM noted that the government of Malaysia will top up any deficit in cashflow coverage as per its commitment under the letter of undertaking.
Sarawak Hidro's operating performance showed a major recovery in 2016 following the enhancement of the plant, resulting in fewer forced outages during the year.
"Although some problems were encountered this year vis-a- vis the turbine and generator (since rectified), the Company had incurred minimal penalties of less than 1% of its revenue. As such, its finance service coverage ratio stood at a robust 5.16 times as at the last repayment date in August 2017.
"This is a substantial improvement over our earlier projection of 2.47 times given the stronger demand from SESCO," said RAM.