This is Edra Global Energy Bhd's Powertek plant in Teluk Gong, Malacca. 1Malaysia Development Bhd (1MDB) sold Edra's entire energy assets to China General Nuclear Power Corp (CGN). (Pix taken by Hafidz Mahpar for Star Online)
PETALING JAYA: Edra Energy Sdn Bhd, a company that used to be under 1Malaysia Development Bhd (1MDB) indirectly, managed to garner a AA3 rating with a stable outlook for an Islamic bond issue to build a power plant.
The rating for the RM5.28bil Islamic debt issue came amid concerns that the technology used in the construction of the gas-fired power plant, with a capacity of 2,242 MW, was untested.
1MDB sold its energy arm, Edra Global Energy Sdn Bhd, to China General Nuclear Power Corp (CGN) in November 2015 for RM10bil.
By then, Edra Global Energy had already secured the mandate to build the power plant in Melaka. The award came seven years ahead of its scheduled commissioning, something that is unprecedented in the Malaysian power generation sector.
According to release from RAM Ratings, the rating on Edra Energy was on the basis of its project economics, stable cash-flow and its ability to meet the minimum finance service coverage ratio of 1.5 times upon the plant’s completion.
It also pointed that the technology used in the turbine was untested globally and there was completion risk as equity needed to be injected into the project as construction progresses.
“Given the technology used in the turbine is untested and no other plant of this scale is currently in commercial operation globally, the company is exposed to technology risk,” said RAM’s co-head of infrastructure & utilities ratings Chong Van Nee.
“As the Plant is under construction stage and equity will be progressively injected into the project throughout the construction period, this also exposes the project to construction-related risk and uncertainty of funding,” he added.
The gas turbine is supplied and maintained by General Electric Company while the turnkey engineering, procurement and construction contract went to South Korean and Malaysian arm of Hyundai Engineering group.
