RAM assessing impact on Sarawak Hidro’s sukuk murabahah

KUALA LUMPUR: RAM Rating Services Bhd is examining the rating impact on Sarawak Hidro Sdn Bhd’s sukuk murabahah of up to RM5.54bil in nominal value.

In a statement, RAM said the rating impact examination emanated from the recent announcement by the Sarawak Chief Minister on the proposed acquisition by Sarawak Energy Bhd of Sarawak Hidro, which owns and operates the Bakun hydroelectric power plant.

“As plans with regard to the sukuk can only be finalised upon completion of the proposed acquisition, RAM will reassess the rating when more details become available,” it said.

In a separate statement, RAM said it is of the view that Sarawak Energy would be able to take on additional debts for the proposed acquisition of Sarawak Hidro, as well as the existing debts of the acquiree, provided the group maintained its existing planned capacity expansions.

“The existing debts of Sarawak Hidro after the proposed acquisition could be offset by future payment obligations to Sarawak Hidro under the power-purchase agreement between the two parties.

“In addition, Sarawak Energy’s ownership of Sarawak Hidro could result in longterm savings in electricity generation cost and economies of scale, with full details pending finalisation of the proposed acquisition, which was recently announced by the Sarawak Chief Minister,” said the rating agency.

Sarawak Energy is a vertically integrated electricity group with a monopoly over the transmission and distribution of electricity in Sarawak.

Sarawak Energy has a RM15bil sukuk musyarakah programme (2011/2036), rated AA1/ stable by RAM.

Meanwhile, Sarawak Hidro, the owner and operator of the 2,400MW Bakun plant, under a power purchase agreement which runs up to March 31, 2043, is the sole independent power producer in Sarawak.

Should the proposed acquisition of Sarawak Hidro be completed, Sarawak Energy would fully own all generation plants in the state, it added.