RAM Ratings has affirmed the AA3/Stable rating of RP Hydro (Kelantan) Sdn Bhd's (RP Hydro or the Issuer) RM975 mil ASEAN Green SRI Sukuk under the shariah principle of Wakalah Bi Al-Istithmar (2023/2043) (Senior Sukuk). 

The rating reflects RP Hydro's expected sturdy project economics upon the completion of its three small run-of-river hydropower plants (the Plants or the Project) in Kuala Krai and Gua Musang, Kelantan, underscored by the favourable terms of the Renewable Energy Power Purchase Agreements (REPPAs) for the Plants and low offtake risk from a strong counterparty. Jointly owned by Rising Promenade Sdn Bhd and Malakoff Corporation Berhad (Malakoff) through its subsidiary Tuah Utama Sdn Bhd, RP Hydro inked three 21-year REPPAs with Tenaga Nasional Berhad, the sole offtaker, in June 2021 for the generation and sale of electricity from the Plants. With a combined installed capacity of 84 MW, the Plants sit along Sungai Galas at three sites: Kuala Geris (25 MW), Kemubu (29 MW) and Serasa (30 MW).

As of 31 December 2023, the Plants' overall construction progress of 6% (against the targeted 8%) was largely on track, with initial survey works and basic design finished. The slight variance was mainly due to modifications to the planned access roads, which caused consequential delays such as authority approvals, detailed design finalisation and construction commencement. Under a revised construction plan, the proposed access roads are 69% to 74% shorter than initially envisaged, allowing the Project to be completed by the targeted August 2026, as agreed under the RM915.0 mil fixed-price lump-sum turnkey engineering, procurement, construction and commissioning (EPCC) contract. 

Construction risks are moderated by the EPCC Contractors' (comprising XD Power Transmission (M) Sdn Bhd, Gezhouba Engineering (Malaysia) Sdn Bhd and CSPDR Malaysia Sdn Bhd) experience and established track record as well as the sizeable time buffer and adequate contingencies incorpo