KUALA LUMPUR (July 3): There is no immediate liquidity concern arising from the delayed commissioning of solar energy firm Tadau Energy Sdn Bhd's 48MWac solar photovoltaic plant in Kudat, Sabah, known as Unit 2, RAM Rating Services Bhd said today.

The rating agency said the delay has exceeded its assumption of three months, that is, plant commissioning on June 30.

Originally slated to begin commercial operations on March 31 under its power purchase agreement (PPA), Tadau now expects the plant to start operations by end-July.

Eighty percent of Tadau Energy shares are owned by Kagayaki Energy Sdn Bhd, while Edra Solar Sdn Bhd held the remaining 20% stake as at May 15, 2017.

"Based on the latest construction progress report, Unit 2 is largely completed, with overall progress standing at 96% as of May 15. The company is now working closely with Sabah Electricity Sdn Bhd to complete the remaining testing and commissioning works, and has also written to the Energy Commission for an extension of time until July 31," said RAM in a statement today.

RAM noted that despite the delay, Tadau's liquidity position remains intact.

"The upcoming profit payment under the company's RM250 million SRI Sukuk (2017/2033) due on July 27 is pre-funded as part of the overall project cost.

"We also draw comfort from the substantial RM29.9 million contingency sum or 12% of the construction cost of the entire plant, which can be utilised to meet any shortfall in financial obligations and the minimum required balance under the Finance Service Account," said RAM.

RAM added that in the event that there is no significant progress in the remaining testing and commissioning works, the RM250 million sukuk's rating of AA3 with a stable outlook, may be subject to a downward revision.