Infrastructure Financing through Islamic
Finance in the Islamic Countries
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Case 3: Green SRI Sukuk Tadau
Although the Sustainable and Responsible Investment (SRI) Sukuk Framework was issued in
2014, the first green sukuk under this framework was issued in July 2017. Valued at RM 250
million (USD 59.2 million), the Green SRI Sukuk Tadau were issued by Tadau Energy Sdn
Berhad as Islamic, medium-term notes to finance two solar power plants that would produce
50 MW of electricity in Kudat, Sabah. The investment in green energy is a private sector
initiative of Tadau Energy which is a Malaysian private limited company established with the
goal of constructing and operating solar projects by two other companies Kagayaki Energy and
Edra Solar. While the former is a Malaysian renewable energy and sustainable technology
investment firm, the latter is a wholly owned subsidiary of Edra Power Holdings which is an
independent power producer with a diversified portfolio of renewable and fossil fuel power
plants and is a subsidiary of CGN, a Chinese energy company involved in constructing and
operating nuclear and renewable plants (CICERO 2017). 58
Chart 4.2. 14: Structure of Green SRI Sukuk Tadau (Construction Stage)
Source: PTC SRI Sukuk Tada
Green SRI Sukuk Tadau was issued in 15-tranches of two to 16 years maturities with coupon
payoffs ranging from 4.8% for the RM14 million two-year component to 6.2% for the RM10
million 16-year piece. The sukuk structure was based on the principles of istisna, ijarah and
ijarah mawsufah fi zimmah. The risks were mitigated by securing legal assignments of the
issuer’s right, title and benefits in all the licenses and permits related to the project and two
21-year power purchase agreements with Sabah Electricity Sdn Bhd, an entity owned by state
government of Sabah (Boey 2017). Rated at AA3 by RAM, Affin Hwang Investment Bank was
the principal advisor, lead manager and arranger, underwriter and facility agent of the issue.
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