6th Aug 2014 09:32
LONDON (Alliance News) - OPG Power Ventures PLC Wednesday said it has entered into a joint venture agreement with Noble Chartering, a subsidiary of Noble Group Ltd, to secure attractive long-term rates for international freight.
The AIM-listed developer and operator of power plants in India said it previously worked with Noble Chartering, which provides vessels to ship coal.
The company said that under the long-term freight deal, OPG and Noble are to purchase and own two 64,000 tonne cargo vessels at a cost of roughly USD28 million each, with the companies to invest USD9 million each in stages over the period until delivery of the vessels in early 2017 as their equity contribution to the joint venture.
Under the terms, OPG will commit to provide 1.5 million tonnes per year for carriage by the two vessels for a minimum period of ten years at competitive long-term rates.
The company said that both parties are committed to achieve savings against prevailing shipping rates and effective operation of the fleet of two vessels.
OPG said that freight costs have in the past made up approximately 25% to 40% of the total landed cost of the imported coal it has purchased, depending upon activity and rates in the bulk cargo market.
The company said it believes the deal is strategically attractive as it ensures visibility, control and competitiveness of the cost of transportation for all of OPG's imported coal requirements for the Chennai I, II and III power plants.
OPG Power Ventures shares were up 1.3% to 100.00 pence on Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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