MARC Ratings has affirmed its AAAIS rating on TNB Western Energy Berhad’s (TNB Western) outstanding RM3.2 billion sukuk with a stable outlook. TNB Western serves as the funding vehicle for TNB Manjung Five Sdn Bhd, an indirect wholly-owned 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 equalised with TNB’s AAA/Stable corporate credit rating, reflecting its unconditional and irrevocable rolling guarantee to cover any finance service account (FSA) shortfalls, as well as its undertaking to maintain full (direct or indirect) ownership of TNB Manjung Five and TNB Western throughout the sukuk tenure.
The plant’s unplanned outage rate (UOR) rose to 13.7% as at end-2025, exceeding PPA limits of 6.0% and 8.0%, driven by multiple outages, including failures involving its boiler tube (16 days), generator (18 days) and turbine pipe (8 days). Rectification works have been completed, with the UOR expected to normalise below PPA limits by mid-September 2026. The outages reduced capacity payments (CP) by RM50.6 million, with CP declining 8.7% y-o-y to RM522.2 million in 2025. Energy payments (EP) fell 21.5% to RM1,122.8 million, in line with lower output as net generation decreased 8.9% to 6,692.6 GWh. Fuel cost pass-through remained constrained by limited heat-rate headroom under the PPA and typical boiler fouling and slagging.
TNB Manjung Five’s revenue declined by 21.5% to RM1.4 billion in 2025 due to lower EP. Cash flow from operations (CFO) remained stable at RM316 million. Cash of RM103.3 million as of 6 March 2026, together with an average monthly CFO of RM31.9 million, is sufficient to meet the RM201.8 million in sukuk profit payment and principal repayment due on 30 July 2026.
The average projected finance service coverage ratio is 1.55x, with a minimum of 1.36x. Cash flow coverage remains resilient under moderate downside sensitivities, including a 10% increase in variable operating expenses and 2%–5% CP reductions.