KUALA LUMPUR (Nov 25): Sarawak Energy Bhd’s financials are not expected to be affected by the reduction in electricity tariffs ranging from 2% to over 40% for domestic customers, as announced by Sarawak Chief Minister Tan Sri Adenan Satem last week, said RAM Rating Services Bhd (RAM Ratings).

“Sarawak Energy’s credit profile remains anchored by the strong support that it enjoys from the state and federal governments, given its position as the only electricity utility company in the state, which highlights its pivotal role in the Sarawak Corridor of Renewable Energy (SCORE),” said RAM Ratings co-head of infrastructure and utilities ratings Chong Van Nee in a statement today.

The rating agency added that the AA1/Stable rating of Sarawak Energy’s Sukuk Musyarakah Programme of up to RM15 billion remains moderated by the group’s weak balance sheet and cashflow coverage in the immediate term as it seeks to fulfill its mandate to expand its generation capacity for the SCORE development.

“We note that the downward tariff revision is in line with the gradual reduction in Sarawak Energy’s operating cost amid the increase in the proportion of hydro-power capacity in its generation mix.

"While domestic customers accounted for 16.5% of total electricity sales (in its financial year ended Dec 31, 2013), we anticipate the tariff revision to result in a less than 5% reduction of the group’s cashflow,” it said.

The tariff reduction, to be effective on Jan 1, 2015, will be just under 20% for those with a monthly consumption of 200 to 300 units, and 10% for 300 to 400 units. Those with a monthly consumption of over 400 units will get a reduction of 2% to 4%.