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Press Release
10 Dec | Wednesday
RAM Ratings reaffirms AA3/Stable rating of Jimah Energy Ventures’ sukuk

RAM Ratings has reaffirmed the AA3/Stable rating of Jimah Energy Ventures Sdn Bhd’s (JEV or the Company) RM4.85 billion Senior Islamic Medium-Term Notes Facility (2005/2025). JEV is an independent power producer that owns and operates a 1,400-MW coal-fired power plant (the Plant) in Port Dickson, Negeri Sembilan, under a 25-year Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB).

The reaffirmation of the rating is premised on JEV’s stable business profile, underscored by the favourable terms of its PPA with TNB and its strong cashflow-generation ability. We derive further comfort from the sturdy credit profile of its sole off-taker, TNB, whose debt issue is rated AAA/Stable by RAM.

As expected, JEV registered a strong finance service coverage ratio (FSCR) of 1.66 times (with cash balances, post-distribution, calculated on payment dates) on its last principal repayment date (12 November 2014), backed by a cash balance of RM114.15 million. Going forward, the Company’s average annual pre-financing cashflow of RM681.60 million is expected to sufficiently support its obligations under the Senior IMTN, even after factoring in proposed dividend payments of RM30 million and capex totalling RM44 million, as reflected by its projected minimum FSCR (with cash balances, post-distribution, calculated on payment dates) of 1.50 times throughout the remaining tenure of the instrument. The FSCR also meets RAM’s threshold for AA3-rated transactions.

Meanwhile, JEV had experienced a number of unscheduled outages, primarily arising from boiler tube leakage owing to the Plant’s high load factor since late 2010 and the usage of lower quality coal. As a result, the Company recorded reduced available capacity payments and daily utilisation payments amounting to RM59.54 million from August 2013 to December 2013 and RM41.13 million from May 2014 to September 2014. However, the reduction is not anticipated to have any financial impact as JEV is expected to be compensated by the operations and maintenance service provider, a consortium made up of Jimah O&M Sdn Bhd and Jimah Teknik Sdn Bhd.

As with other IPPs, JEV remains exposed to regulatory and single-project risks.

Media contact:
Adeline Poh
(603) 7628 1021
adeline@ram.com.my

source: RAM Rating Services Berhad
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