TRIS Rating Co., Ltd. has assigned the company rating of National Power Supply Co., Ltd. (NPS) at "BBB+" with "stable" rating outlook. The rating reflects NPS's stable cash flow from long-term sales contracts under the Small Power Producer (SPP) program, high profitability, the operating flexibility derived from the mix of biomass fuel used, and the experienced management team from AA Alliance Group (the Group) which operates the biomass power plants. The rating takes into consideration some unfavorable factors: the power plant's operating risk, rising fuel prices, and the availability of biomass-fuel. The passive shareholder, a Hong Kong investment holding company owning 94% of NPS, causes uncertainty regarding future policy. However, the rating is buoyed by the fact that the Group will continue to manage and control the ongoing business of the power plant.
TRIS Rating reported that NPS is one of the power plants of AA Alliance Group. The Group holds 6% stake in NPS via Advance Power Supply PLC (APS), the Group's power holding company. NPS's power plant was set up under the SPP program to operate two mixed-fuel power generators with total capacity of 328 MW. The fuels used are coal and biomass, i.e. rice husk and wood bark. The Group's involvement in NPS's business is by serving as key management, power plant operator, maintenance service provider, biomass suppliers, and major customers. The high degree of group dependency needs to be continuously monitored in the long term.
TRIS Rating said that the electricity revenue of NPS is 100% secured under a 25-year Power Purchase Agreement with the Electricity Generating Authority of Thailand (EGAT) (180 MW) and a 15-year Power Sales Agreement with 304 Industrial Park Co., Ltd. (304IP) (50-120 MW). All of the steam output is supplied to Advance Agro PLC (AA) under a 15-year Steam Supply Agreement. On the supply side, coal, the main fuel, which accounts for 90% of total fuel cost, is sourced from Marubeni Corporation under a 15-year Coal Supply Agreement, while all biomass fuel is supplied by the Group under long-term and annual contracts. TRIS Rating said, NPS manages to generate a high operating margin due to the biomass' relatively low cost compared with the conventional power operators. While this provides the advantage of flexibility in fuel selection, the biomass co-fired power plant has more exposure to operating risk, due to the specific characteristics of each biomass type.
The "stable" outlook reflects TRIS Rating's expectation that NPS will continue to receive stable revenue from the long-term contract with EGAT and there will be no major threats to the fuel supplies. The power plant is expected to be well-managed by the experienced AA Alliance Group and biomass fuel is expected to be made available by the Group at all times. No additional investment is incorporated in this rating. -- End
National Power Supply Co., Ltd. (NPS) Company Rating: BBB+ Rating Outlook: Stable
TRIS Rating reported that NPS is one of the power plants of AA Alliance Group. The Group holds 6% stake in NPS via Advance Power Supply PLC (APS), the Group's power holding company. NPS's power plant was set up under the SPP program to operate two mixed-fuel power generators with total capacity of 328 MW. The fuels used are coal and biomass, i.e. rice husk and wood bark. The Group's involvement in NPS's business is by serving as key management, power plant operator, maintenance service provider, biomass suppliers, and major customers. The high degree of group dependency needs to be continuously monitored in the long term.
TRIS Rating said that the electricity revenue of NPS is 100% secured under a 25-year Power Purchase Agreement with the Electricity Generating Authority of Thailand (EGAT) (180 MW) and a 15-year Power Sales Agreement with 304 Industrial Park Co., Ltd. (304IP) (50-120 MW). All of the steam output is supplied to Advance Agro PLC (AA) under a 15-year Steam Supply Agreement. On the supply side, coal, the main fuel, which accounts for 90% of total fuel cost, is sourced from Marubeni Corporation under a 15-year Coal Supply Agreement, while all biomass fuel is supplied by the Group under long-term and annual contracts. TRIS Rating said, NPS manages to generate a high operating margin due to the biomass' relatively low cost compared with the conventional power operators. While this provides the advantage of flexibility in fuel selection, the biomass co-fired power plant has more exposure to operating risk, due to the specific characteristics of each biomass type.
The "stable" outlook reflects TRIS Rating's expectation that NPS will continue to receive stable revenue from the long-term contract with EGAT and there will be no major threats to the fuel supplies. The power plant is expected to be well-managed by the experienced AA Alliance Group and biomass fuel is expected to be made available by the Group at all times. No additional investment is incorporated in this rating. -- End
National Power Supply Co., Ltd. (NPS) Company Rating: BBB+ Rating Outlook: Stable