Thursday, 05 January 2012 14:14
5 January, 2012
Rurelec PLC (AIM:RUR), the electricity utility which owns and
operates power generation capacity in Latin America,
announces its expansion into Chile. Rurelec has today
acquired a 50 per cent interest in Termonor SA, a Chilean
project company which has developed a fully consented 38 MW
diesel fired power plant in Arica, the port city which lies
close to the northern Chilean borders with Peru and Bolivia
Commercial operation is expected before the end of
2012.
Under the terms of the agreement, Rurelec is paying
US$162,500 split equally between Invener, a local development
company, and Enerbosch, the Chilean construction group, for a
50 per cent interest in Termonor. A further US $362,500 will
be paid when the Arica project
reaches certain milestones linked to financial completion and
commercial operation taking the total consideration to US
$525,000. Rurelec will also reimburse IPC's development
costs of US$250,000 when the Arica plant enters commercial
service, which is expected to be in the last quarter of 2012.
The total equity requirement for the project is a further
US$4 million over the construction period. This will be
subscribed in the amount of US$2 million by Rurelec and US$2
million jointly by Invener and Enerbosch. Project
construction debt is to be provided by
suppliers and a privately placed project bond issue.
Rurelec's strategy to expand into Chile and Peru, where
both countries are experiencing high demand growth for power,
was made possible by the substantial increase in the share
capital of Rurelec completed in April 2011, which eliminated
the Company's external borrowings.
Commenting on the Chilean expansion (which follows an
announcement concerning Peruvian expansion on 12 December
2011), Peter Earl, Chief Executive of Rurelec said:
"I am delighted to announce our expansion into Chile, a
country we have hoped to enter since
2007.
"The grid in the Chilean Northern SING is currently
under severe pressure. Our initial 38 MW
installation will relieve that pressure but it also
represents a hugely significant first step for us
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Rurelec PLC - Expansion Into Chile with a 38 MW Project in AricaThursday, 05 January 2012 14:14
since the large mining companies, who are the main users of electricity in the north of Chile, will be awarding more than 1,000 MW of valuable power purchase agreements over the coming twelve months. We hope that 2012 will see Rurelec become the dominant new entrant in the Chilean power system over this period. With good fortune, this initial 38 MW in Arica will be just the start of a portfolio of excellent, new Clean Tech power plants in Chile."
Termonor SA
Existing cash producing power generation assets in both Chile
and Peru change hands at a substantial premium to book value.
Rurelec has therefore been working closely with the power
development team of Independent Power Corporation PLC
("IPC"), which specialises in greenfield power
generation projects, to identify and acquire development
projects which are at an advanced stage of development and
therefore constitute a low risk since project costs have been
fixed and the new power plant is typically less than a year
away from commercial operation.
Based on this cautious approach to expansion, Rurelec has
come to an agreement with IPC and with IPC's Chilean
power development partners for the acquisition of a 50 per
cent interest in Termonor SA, the Chilean project company
which owns all rights to a fully consented 38MW thermal power
plant development in Arica. Arica is one of the most
northerly cities in Chile. It is the principal port for
northern Chile and serves the significant expansion projects
in copper production and in mining of other minerals in the
north of the country. Some 73 per cent of all the port
traffic of Arica is destined for Bolivia. It is expected that
power demand in the region
will grow at a significant rate in the near future as current
mining expansion projects, notably at
Collahuasi, come into production.
The 38 MW Arica plant will be based on a GE 6B gas turbine
similar to the two in operation at Rurelec's Energia del
Sur ("EdS") plant in Argentina, and this ability to
own and operate a similar turbine to the type already
successfully installed in Comodoro Rivadavia is expected to
lead to operating efficiencies across the Rurelec group.
It would be Rurelec's intention in due course to install
further 6Bs in northern Chile and eventually convert them to
combined cycle operations modelled on the successful project
at EdS.
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Rurelec PLC - Expansion Into Chile with a 38 MW Project in AricaThursday, 05 January 2012 14:14
Rurelec and its new Chilean partners intend to secure long
term bank debt on the Arica plant once it enters commercial
service. The debt markets in Chile are strong for
asset-backed loans, and Rurelec expects to secure long term
finance for the completed plant at interest rates
considerably more favourable than could be obtained in
Europe.
In order to facilitate the issue of local bonds, it is the
Company's intention to secure a dual listing on the
Santiago Stock Exchange, as soon as possible.
For further information please contact:
Rurelec Plc:
Peter Earl, Chief Executive Officer
Elizabeth Shaw, Finance Director
www.rurelec.com
Tel: +44 (0) 20 7793 5610
Daniel Stewart & Company Plc (Nomad):
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Rurelec PLC - Expansion Into Chile with a 38 MW Project in AricaThursday, 05 January 2012 14:14
Paul Shackleton/Noelle Greenaway
Tel: + 44 (0) 20 7776 6550
XCap Securities Plc (Broker):
John Grant/Jon Belliss
Tel: + 44 (0) 20 7101 070
Ana Ribeiro, Tim Blythe:
Blythe Weigh Communications
Tel: + 44 (0) 20 7138 3206
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