MARC Ratings has affirmed its AAAIS rating on TNB Western Energy Berhad’s (TNB Western) outstanding RM3.5 billion sukuk with a stable outlook. TNB Western serves as the funding vehicle for TNB Manjung Five Sdn Bhd, a wholly-owned indirect subsidiary of Tenaga Nasional Berhad (TNB). TNB Manjung Five operates a 1,000MW coal-fired power plant in Manjung, Perak, under a 25-year power purchase agreement (PPA) with TNB.
The rating is aligned with TNB’s corporate credit rating of AAA/Stable, reflecting its unconditional and irrevocable rolling guarantee to cover any shortfalls in the finance service account, as well as its commitment to maintain full ownership — either directly or indirectly — of both TNB Manjung Five and TNB Western throughout the sukuk tenure.
As of end-2024, the plant’s unplanned outage rate was 3.48%, below the PPA threshold of 6.00%, qualifying it for a full RM571.7 million capacity payment (CP). However, a lower applicable coal price led to a 5.1% drop in energy payment (EP), totalling RM1,427.3 million for the year.
TNB Manjung Five reported revenue of RM1.8 billion in 2024, a decline of 3.8% y-o-y, primarily due to lower EP. However, operating cash flow increased to RM404.3 million in 2024 (2023: RM139.2 million), supported by a higher capacity rate financial that coincided with the commencement of sukuk repayments in 2024. MARC Ratings assesses liquidity as adequate to cover the upcoming RM200.2 million in profit payments and principal repayments due on July 30, 2025, underpinned by cash balance of RM121.4 million as at end-March 2025 and projected monthly operating cash flow of approximately RM36 million through 2025.
The average projected finance service coverage ratio is 2.68x, with a minimum of 1.43x. The cash flow coverage demonstrates resilience under moderate downside sensitivities, including a 10% increase in variable operating expenses and CP reductions of 2% and 5%.