RAM Ratings has affirmed its AA2/Stable rating of Tanjung Bin Power Sdn Bhd's (the Company) RM4.5 bil Sukuk Ijarah Programme. 

The rating reflects expectations of continued steady cash flows, adequate liquidity, and debt service coverage in line with the rating benchmark. However, ongoing operational issues at the Company's 2,100 MW (3 units x 700 MW) coal-fired power plant in Tanjung Bin, Johor have reduced financial headroom. The rating also assumes that capital management, including shareholder distributions to Malakoff Corporation Berhad (90% shareholder), will remain aligned with the Company's cash flow generation and debt service requirements, unless performance exceeds expectations. 

Operational disruptions in 2025, including a coal unloader collapse and generator rotor issue, pushed outage rates beyond power purchase agreement limits, resulting in a RM68.8 mil reduction in available capacity payments (ACPs). Strong dispatch demand from sole offtaker, Tenaga Nasional Berhad (TNB), partially offset the impact, while compliant heat rates enabled pass-through of the majority of fuel costs to TNB.

The outlook for 2026 is more challenging, with a projected RM342.0 mil ACP reduction due to extended outages and RM160.0 mil in rectification costs, that are expected to be largely covered by insurance. Our stressed scenario indicates that finance service coverage ratios (FSCRs) (with cash balances, post-distribution) are expected to remain largely above 1.65 times over the sukuk's tenure, with temporary dips on August 2026 and August 2027 payment dates, before recovering. 

The Company has indicated it will undertake mitigating measures ? including deferring O&M payments or accessing parental support - to maintain the required FSCR levels if insurance proceeds are insufficient. 

As with other independent power producers, Tanjung Bin Power faces the risk of regulatory changes, rising insurance costs and single-project exposure, particularly amid the transi