MARC wishes to inform that Sparks Energy 1 Sdn Bhd has faced delays in achieving commercial operation date (COD) of its 30MWac solar power plants in Kuala Muda, Kedah and Machang, Kelantan. The delays have been attributed to logistics issues as a result of movement restrictions in the country due to the COVID-19 pandemic, as well as to unfavourable weather conditions. The programme carries a AA-IS/Stable rating from MARC. However, no notes under the proposed sukuk have been issued; any issuance will take place only after the COD has been achieved.
Sparks Energy 1 had earlier obtained an interim extension of time (EOT) of 75 and 84 days, revising the new CODs to December 14 and 23, 2020 for the Machang and Kuala Muda plants from the scheduled COD of September 30, 2020. Construction progress for the Kuala Muda and Machang plants stood at 93% and 73% as at end-March 2021 with COD targeted in June and July 2021. The construction is being undertaken in the walkaway period which ends in mid-June 2021 (the walkaway event date) under the terms of the power purchase agreements (PPAs). The project companies have applied for an extension of the walkaway event date. Given that the plants have completed construction substantially, it is unlikely for the agreements to be terminated.
The construction is currently being funded by a bridging loan of RM220 million. At the current juncture, there is no revision to the existing budget. Any cost overrun is to be borne by the engineering, procurement, construction and commissioning (EPCC) contractor under the lump sum contract. The rating agency will monitor the commissioning progress and will provide further updates.