TRIS Rating Co., Ltd. has affirmed the rating of Bt7,500 million senior secured debentures (KEGCO#1) of Khanom Electricity Generating Co., Ltd. (KEGCO) at “AA-” with “stable” outlook. The rating reflects KEGCO’s solid project fundamentals, its strategic position as a major base load generator in
Thailand’s southern region and its proven operational track record. However, these strengths are partially
offset by uncertainty about the deregulation of the power industry.
The “stable” outlook reflects TRIS Rating’s expectation that KEGCO will continue to receive stable cash flow from electricity sales from its power plants. All units of the Khanom power plant are expected to continue to achieve their performance targets.
TRIS Rating reported that KEGCO was established in 1995 to buy the 824-megawatt (MW) Khanom power plant from the Electricity Generating Authority of Thailand (EGAT) under EGAT’s privatization
plan. KEGCO is a wholly-owned subsidiary of the Electricity Generating PLC (EGCO), which is 25.4%
owned by EGAT. The power plant is located in Nakorn Sri Thammarat province in southern
Thailand. It consists of two barge-mounted thermal plants (150 MW) and a combined cycle gas
turbine (674 MW).
TRIS Rating said, the 15- to 20-year power purchase agreement (PPA) between EGAT and KEGCO is well-structured. The pay-if-available payment commitment mitigates KEGCO’s demand risk while the
cost-plus basis tariff structure reduces KEGCO’s price risk. Competitive advantages stem from
the company’s key location in an area with increasing demand for electricity and its base load
generation, which supplies about 60% of total demand in the southern region. KEGCO’s operating
performance has been satisfactory. Its availability and plant heat rates since the start of operations
have met performance targets specified in the PPA. The proven technology combined with
experienced staff reduces technology and operating risks. A pass-through component in the energy payment structure limits KEGCO’s exposure to fuel risk.
TRIS Rating also said that since EGAT is the sole purchaser, KEGCO’s credit rating is constrained by EGAT’s credit quality. Currently, EGAT’s privatization has been suspended by the Supreme Administrative Court and EGAT remains a state-owned enterprise, wholly owned by the government.
KEGCO’s 2005 financial performance was satisfactory because the company maintained
its power plant availability factor as high as 94.9%. Electricity sales rose from Bt4,224 million in
2004 to Bt4,339 million in 2005 and Bt4,188 million for the first nine months of 2006. The
level of outstanding debt has fallen to Bt6,752 million as of September 2006. The total debt to capitalization ratio has continuously improved from 61.5% in 2004 to 52.8% at the end of September 2006. KEGCO’s debt service coverage ratio of 1.32 times in 2005 was far higher than its minimum requirement of 1.1 times, said TRIS Rating. -- End
Khanom Electricity Generating Co., Ltd. (KEGCO)
Issue Rating:
KEGCO#1: Bt7,500 million senior secured debentures due 2011 Affirmed at AA-
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
Thailand’s southern region and its proven operational track record. However, these strengths are partially
offset by uncertainty about the deregulation of the power industry.
The “stable” outlook reflects TRIS Rating’s expectation that KEGCO will continue to receive stable cash flow from electricity sales from its power plants. All units of the Khanom power plant are expected to continue to achieve their performance targets.
TRIS Rating reported that KEGCO was established in 1995 to buy the 824-megawatt (MW) Khanom power plant from the Electricity Generating Authority of Thailand (EGAT) under EGAT’s privatization
plan. KEGCO is a wholly-owned subsidiary of the Electricity Generating PLC (EGCO), which is 25.4%
owned by EGAT. The power plant is located in Nakorn Sri Thammarat province in southern
Thailand. It consists of two barge-mounted thermal plants (150 MW) and a combined cycle gas
turbine (674 MW).
TRIS Rating said, the 15- to 20-year power purchase agreement (PPA) between EGAT and KEGCO is well-structured. The pay-if-available payment commitment mitigates KEGCO’s demand risk while the
cost-plus basis tariff structure reduces KEGCO’s price risk. Competitive advantages stem from
the company’s key location in an area with increasing demand for electricity and its base load
generation, which supplies about 60% of total demand in the southern region. KEGCO’s operating
performance has been satisfactory. Its availability and plant heat rates since the start of operations
have met performance targets specified in the PPA. The proven technology combined with
experienced staff reduces technology and operating risks. A pass-through component in the energy payment structure limits KEGCO’s exposure to fuel risk.
TRIS Rating also said that since EGAT is the sole purchaser, KEGCO’s credit rating is constrained by EGAT’s credit quality. Currently, EGAT’s privatization has been suspended by the Supreme Administrative Court and EGAT remains a state-owned enterprise, wholly owned by the government.
KEGCO’s 2005 financial performance was satisfactory because the company maintained
its power plant availability factor as high as 94.9%. Electricity sales rose from Bt4,224 million in
2004 to Bt4,339 million in 2005 and Bt4,188 million for the first nine months of 2006. The
level of outstanding debt has fallen to Bt6,752 million as of September 2006. The total debt to capitalization ratio has continuously improved from 61.5% in 2004 to 52.8% at the end of September 2006. KEGCO’s debt service coverage ratio of 1.32 times in 2005 was far higher than its minimum requirement of 1.1 times, said TRIS Rating. -- End
Khanom Electricity Generating Co., Ltd. (KEGCO)
Issue Rating:
KEGCO#1: Bt7,500 million senior secured debentures due 2011 Affirmed at AA-
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.