10th Apr 2008 07:01
Greenko Group plc10 April 2008 Greenko Group plc New concessions build capacity Following our recent trading update, Greenko Group plc ("Greenko" or the"Company") is pleased to announce that in the year ended 31 March 2008 it hasagreed to acquire two further new concessions. These will be a 24 MW hydro plantat Paudital-Lassa in Himachal Pradesh and a 31 MW biomass plant at Sunam inPunjab; both of which will be 100% owned by Greenko through Special PurposeVehicles ("SPV"). These new assets, alongside the 15 MW and 5 MW hydro concessions announced inthe Company's Interim Results on 17 December 2007, will increase Greenko's totalprojects under development from 27 MW, at the time of the Company's IPO inNovember 2007, to 102 MW. This is in addition to the 90.5 MW of contractedcapacity which Greenko currently controls and the pipeline of furtheracquisitions presently under negotiation, which exceeds 500 MW. Greenko's intended strategy will be to develop the new concessions as 'merchantplants' under the terms of the recent power trading licence granted to theCompany, whereby the plants will sell power directly to industrial customersthrough short term PPA's to take advantage of forecasted premium prices. TheElectricity Act 2003, which will enable this direct sale of electricity to endusers, will begin to take effect from January 2009 as per the guidelines set outby the Ministry of Power. The details of the individual concessions are as follows: Paudital-Lassa Hydroelectric concession Greenko has entered into a license acquisition agreement to develop a 24 MWhydro project in the village of Paudital-Lassa, in Simla District, HimachalPradesh State through the SPV "Greenko Hatkoti Energy Private Limited". Projectwork is expected to commence within 10-12 weeks and it is anticipated thatconstruction will take approximately 24 months. It is expected that the projectwill generate 67,000 tonnes of CERs per annum with minimal effect on thesurrounding landscape and no requirement for resettlement of local communities. The concession will be fed by the snow fed rivers of Himachal Pradesh, whichwill give it a higher plant load potential. It is planned that power will besold onto neighbouring states such as Delhi, Punjab and Rajasthan through thewell established North Western grid. Sunam Biomass concession Greenko has formed an SPV to develop a 31 MW biomass plant in the village ofSunam in Sangrur District, Punjab State, India. Project work is expected tocommence in 8-10 weeks and it is anticipated that the project will takeapproximately 18 months to complete. Upon commencing operations, this will beone of the largest biomass plants in India. It is expected that the project will generate 175,000 tonnes of CERs per annum,is situated in a rice and wheat production area, which will provide the rawbiomass material, and is well positioned to supply clean energy to New Delhi andthe Punja , both of which suffer from acute power deficits. Summary These new concessions, having shorter construction times than the largerutilities which are presently being built, should enable Greenko to capture thevalue of premium power prices prior to these larger utilities coming on line in2014, as well as offering returns in the shortest time possible. In total, theadditional 102 MW of concessions under development, once completed, shouldproduce approximately 450,000 tonnes of CER units per annum, which will form asignificant secondary source of revenues for the Company. Commenting on these new concessions, Anil Chalamalasetty, CEO and co-founder ofGreenko, said: 'This is an excellent way to mark Greenko's first year end as a listed company.During the year we have steadily grown capacity through securing newconcessions, and are favourably placed for the direct sale of power toindustrial end users. Now, following Greenko's acquisition of a power trading licence, direct cleanenergy sales offer the Company the most favourable opportunity to maximiserevenues from the rapidly growing Indian power market.' Enquiries: Greenko Group plcAnil Chalamalasetty +91 (0)98 4964 3333Mahesh Kolli +44 (0)7767 692729Tim Bowen +44 (0)7973 668818 Arden Partners plcChristopher Hardie +44 (0)20 7398 1600Adrian Trimmings Cardew GroupRupert Pittman +44 (0)20 7930 0777Jamie MiltonCatherine Maitland NOTES TO EDITORS Background Greenko intends to become a leading owner and operator of clean energy projectsin India. The business was developed over an 18 month period prior toincorporation by Anil Chalamalasetty and Mahesh Kolli who incorporated thebusiness at the time of its initial fundraising in January 2006. Greenkocurrently has 90.5 MW contracted capacity of clean energy assets including sixbiomass and two hydro plants and 102 MW of concessions under developmentincluding three biomass and three hydro plants. The Company is focused ondeveloping a portfolio of biomass, hydro-electric and wind assets within Indiaand intends to increase the installed capacity it operates through a combinationof purchasing both existing assets and projects under construction, as well asthe winning of concessions to develop new greenfield assets. The Indian renewable energy sector is a relatively young and fragmented market.The new projects are likely to take the form of the acquisition of existingassets under construction and the building of new plants on greenfield sites.Greenko intends to be a consolidator within this sector. The Directors believethat operational and financial benefits will flow from this strategy. The Group's income is generated from receipts for power sold to stateelectricity boards and from sale of high margin carbon credits or CertifiedEmission Reduction units ("CERs") generated from the Group's registered cleanenergy projects. In the future, the Directors believe that new opportunities,such as the direct sale of electricity to large scale users and sales of CERs inthe voluntary market, will broaden the income streams of the Group as well asenhance profitability. The Indian economy India has a population of approximately 1.1 billion people, which is currentlygrowing at 1.5 per cent. per annum, making it one of the largest populations inthe world. The average age of the population is 24, providing a growing, welleducated workforce. The Indian economy has benefited from low inflation andrecent liberalisation has encouraged strong international investment which hashelped to promote strong economic growth particularly in the past five years.The growth in industrial production and GDP per capita has resulted in a strongincrease in demand for electricity. This has led to a shortfall in supply ofsupply, resulting in both brown-outs (where the voltage level drops below thenormal minimum level specified for the system, therefore particularly damagingto electric motors) and black-outs. In addition, the 2001 Indian Census reportedthat 44 per cent. of households did not have access to electricity. Due topopulation growth since 2001 and the existing electricity infrastructure, theDirectors believe this may have increased perhaps to as much as 60 per cent. orover 600 million people. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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