KUALA LUMPUR: The construction of Kimanis Power Sdn Bhd's 285 MW combined-cycle gas turbine
power plant in Kimanis Bay, Sabah is on schedule with physical progress at
66.06% as at May 31, 2012.
Malaysian Rating Corporation Bhd (MARC) said on Monday
the plant was ahead of the scheduled progress of 66.01%.
The ratings agency said the
project's independent consulting engineer, Sinclair Knight Merz, opined that
the Taiwan-based construction consortium leader, CTCI Corporation (CTCI Corp) had the experience and
resources to undertake its role.
CTCI has provided a 10%
performance bond and performance guarantee for the power plant. The performance
guarantee is backed by a similar guarantee from General Electric Company (GE), the manufacturer of the
plant's three 6FA+e gas turbines.
MARC assigned a preliminary
rating of AA-IS to Kimanis's RM1.16bil Sukuk programme. The outlook on the
rating was stable.
Kimanis is a 60:40 joint venture
between Petronas Gas Bhd and Sabah state-owned entity NRG Consortium (Sabah) Sdn Bhd (NRG). NRG is an indirect
unit of Sabah state's investment arm Yayasan Sabah Group (YSG). MARC said Kimanis would issue
the sukuk in two series under the programme, the first series of up to RM860mil
would begin to amortise in 2016 while the second series of up to RM300mil would
start to amortise in 2015.
Drawdowns from the Sukuk
programme would be used to part-finance the power and its initial working
capital. The estimated project costs of RM1.47bil including financing costs
during construction will be funded through a 78:22 debt-to-equity financing
mix.
The rating was constrained by
remaining construction and completion risk in the project prior to achieving
the commercial operations date of generating blocks 1, 2 and 3 by December
2013, February 2014 and April 2014, respectively.
MARC said the power purchase
agreement (PPA) would provide for two-tiered capacity payment rates which would
step down from RM53 per kW per month to RM31.50 per kW per month from the 16th
year of operations onwards.
The tariff structure supports
strong projected debt service coverage with base case minimum and average
finance service cover ratios (FSCRs) of 2.89 times and 6.84 times respectively
over the tenure of the Sukuk programme.
"Projected cash flows assume
a net plant capacity factor of 90% and heat rates within the limits of the PPA.
MARC's cash flow sensitivity analyses indicate that Kimanis' cash flows are
most susceptible to construction cost overruns, project delays and longer
collection of receivables followed by lower plant availability and higher
actual O&M variable costs.
"The project's exposure to
construction cost overruns and delays in start-up is partly mitigated by the
project sponsors' undertaking to provide contingency financial support of up to
RM50mil for the purpose of meeting debt service obligations during the
construction phase and a further RM50mil for construction cost overruns,"
it said. MARC said the stable outlook reflected MARC's expectations that the
construction of the power plant would be completed on schedule and within
budget.
"With the completion and
successful commissioning of the power plant, Kimanis' rating may be revised
upwards to reflect the elimination of construction risk in the project,"
said the ratings agency.
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