KUALA LUMPUR: The Commercial Operation Date (COD) of Jimah East Power Sdn Bhd (JEP) two 1,000 MW ultra-supercritical coal-fired power plants in Jimah, Negeri Sembilan has been delayed.
The COD of the plant was originally scheduled for June 15, 2019, but has now been delayed due to certain defects detected at the high pressure turbine during the commissioning phase of the project.
The Malaysian Rating Corporation (MARC) said on Friday it was informed that repair work was underway and JEP expected the plant to reach DOC within the next three months.
“At this point, MARC believes that no rating action is warranted given that the projected cash flow hedge supports its debt service capacity for a delay of up to three months,” he said. -he declares.
MARC said JEP was developing the plant under a 25-year Power Purchase Agreement (PPA) with TNB. Once construction is complete, JEP will operate the power plant.
MARC confirmed its AA-IS / Stable rating on JEP’s outstanding RM8.98bil Sukuk Murabahah on March 6, 2019, the proceeds of which were used to finance the construction of the power plant.
Commenting on the delay and on-going corrective work, MARC said at this point that no rating action was warranted as the projected cash flow hedge supports its debt service capacity for a delay of up to three months.
Under MARC’s sensitized three-month timeline scenario, JEP would be able to meet the minimum financial services coverage ratio of 1.25 times for the duration of the sukuk.
MARC is reassured by the credit strength of TNB, a key sponsor of the project, which has significant strategic and financial interests in the power plant project with a 70% stake.
“JEP is expected to recover the losses related to the delay through liquidated damages claims from the Engineering, Procurement and Construction (EPC) consortium,” MARC said.
The EPC consortium is made up of the Japanese companies IHI Corporation and Toshiba Corporation; South Korean companies Hyundai Engineering & Construction Co. Limited and Hyundai Engineering Co. Limited and Ishi Power Sdn Bhd and TOS Energy Malaysia Sdn Bhd.
“The rating agency will monitor the progress of JEP and take appropriate rating action if the rectification work does not go as planned, which could cause the COD to delay further,” he said.