MARC Ratings has affirmed its AA+IS rating on Kapar Energy Ventures Sdn Bhd’s (KEV) outstanding RM160.0 million Sukuk Ijarah with a stable outlook. The affirmed rating benefits from a two-notch uplift from KEV’s standalone rating due to expected support from Tenaga Nasional Berhad (TNB, AAA/stable), which has 60.0% ownership of KEV through its wholly-owned subsidiary TNB Power Generation Sdn Bhd. The rating is moderated by persistent technical issues at KEV’s ageing generating facilities (GFs).
KEV owns and operates the Kapar Power Station, comprising three GFs with a combined nominal capacity of 2,200MW. During the review period, the GFs showed improved performance, with two out of three facilities reporting reduced unplanned outage rates (UOR). Since July 2024, GF3 has maintained a UOR below the 6% threshold as stipulated in the power purchase agreement (PPA), following the resolution of issues related to the boiler tube, water pump, and condenser. GF1 exceeded the unplanned outage limit (UOL) in August 2024 due to elevated condenser pressure; however, corrective actions were taken, and performance recovered by March 2025. GF2 remained compliant throughout the period. In 2024, KEV recorded capacity payments (CP) of RM422.6 million, 3.5% below projections — primarily due to technical issues at GF1 and GF3 — although 6.3% higher y-o-y (2023: RM397.5 million). Energy payments (EP) rose 2.4% y-o-y, reflecting increased dispatch to TNB. As in prior years, KEV was unable to fully pass through fuel costs due to heat rates exceeding PPA thresholds.
In 2025, GF2 and GF3 entered contract year block 7 (2025-2027), triggering a UOR reset for both. This gave KEV a buffer against unplanned outages before penalties were to apply. As of end-May 2025, the performance of all GFs remained within PPA limits.
In 2024, KEV reported slightly higher revenue of RM3.14 billion (2023: RM3.07 billion), driven by higher CP and EP. Despite pre-tax loss of RM66.7 million from increased maintenance and repair costs, cash flow from operations remained healthy at RM229.7 million. As at end-July 2025, cash balance — including that in the finance service reserve account — was RM236.1 million, after repayment of RM160 million in sukuk principal in July 2025. This is expected to be sufficient to meet the final sukuk repayment of RM160 million due in July 2026.