RAM Ratings has reaffirmed the AA1/Stable/P1 corporate credit ratings of Edra Power Holdings Sdn Bhd (Edra Power or the Group). 

The reaffirmation is premised on Edra Power's resilient concession-based power generating businesses that are backed by long-term power purchase agreements (PPAs) with government-owned offtakers. The Group's thermal power plants earn availability-based capacity payments and fuel cost-reflective energy payments, which shield them from external volatilities. Operating performance remained commendable with minimal unplanned plant downtime and revenue deductions that underscore Edra Power's dividend flows. That said, as many of its PPAs near maturity over the next few years, timely project replenishment is crucial to sustain the Group's long-term financial profile.

Edra Power is Malaysia's second largest independent power producer group, accounting for 15% of the nation's installed capacity by equity ownership. While the Group's equity capacity is presently at an all-time high of 6.6 GW, this will slide to 4.3 GW between 2023 and 2026 as retired plants outnumber newly awarded and extended projects assuming no new net additions to its power portfolio. Even as Edra Power continues to actively pursue several business opportunities, we remain mindful however, of the potential added risks that large-scale, greenfield ventures or less regulated power markets may introduce. 

Edra Power's investments in Egypt and Bangladesh have continued to perform, albeit with delayed payments in view of the power sector's crucial role in economic development. We note that the offtakers' payment commitments are supported by guarantees from the Central Bank of Egypt and the government of Bangladesh.

The steady operating performance of its power plants sustained the Group's consolidated operating profit before depreciation, interest and tax at RM1.19 bil in FY Dec 2021 (+1.5% y-o-y). Coupled with a substantial RM320 mil fair value gain on financial assets