RAM Ratings has reaffirmed Cenergi SEA Berhad's (Cenergi or the Group) A1/Stable/P1 corporate credit ratings, along with the A1/Stable rating of the Senior Sukuk and A3/Stable rating of the Subordinated Perpetual Sukuk under its RM1.5 bil Senior Sukuk/Subordinated Perpetual Sukuk Programme (2021/2121). The Subordinated Perpetual Sukuk is rated two notches below the Senior Sukuk to reflect increased loss severity and the risk of non-performance relative to senior financing obligations. 

Cenergi is a domestic-focused integrated renewable energy (RE) player, specialising in the production of palm oil mill effluent (POME) biogas power. Based on RAM's rating methodology for government-linked entities, Cenergi is deemed to benefit from a moderate likelihood of extraordinary support from Khazanah Nasional Berhad (Khazanah), which owns a 93% stake in the Group. Our view is underlined by the Group's important role as Khazanah's only sustainable energy arm and its strong relationship with the latter. Khazanah reiterated its support in a recent interaction with us.  

The ratings are reflective of Cenergi's growing concession-based biogas business. The Group is the biggest grid-connected POME biogas provider under Malaysia's Feed-in-Tariff scheme, holding a 13.9% market share (34.4 MW capacity) as at mid-September 2022. Its power projects are backed by long-term RE power purchase agreements with Tenaga Nasional Berhad, the offtaker. These contracts afford attractive tariffs and priority of despatch, imposing no cash penalties for completion delays or underperformance. We view the Group's operational performance as satisfactory, emphasising its strong execution capability.

Cenergi's solar division also showed good traction, delivering six rooftop solar projects year to date, with another five underway. The Group has acquired an 8 MW greenfield solar farm which won a bid to participate in the New Enhanced Dispatch Arrangement  a platform for power players to sell electr