30th Jun 2008 07:00
Greenko Group plc ("Greenko" or the "Company")
Signing of New Power Purchase Agreements
Greenko is pleased to announce that it has signed Power Purchase Agreements ("PPAs") with PTC India Ltd (formerly known as Power Trading Corporation India Ltd) ("PTC") for the output from two of its power plants.
PTC is an Indian Government initiated Public- Private Partnership and the largest trader of merchant power in the country. PTC is listed on the Bombay stock exchange.
The new PPAs relate to the Roshni biomass plant (6 MW) which was acquired by Greenko in June 2007 and the soon to be commissioned Rithwik Power hydro plant (24.5MW).
Under the terms of these PPAs, Greenko is guaranteed to receive Rs6 per Kwh for the power supplied from these plants with a potential further share of the upside should PTC sell the power to the end user at a higher price. This compares with the contracted rates of up to Rs3.2 per Kwh being received from the State Electricity Boards ("SEBs") under the current PPAs.
The signing of these PPAs is an important development for Greenko as this represents an increase in the average tariff of the contracted portfolio of 90.5MW to Rs3.9 per Kwh from Rs3.1 per Kwh. The terms of energy sales for the portfolio are now split between approximately one third under the merchant power model and two thirds through long term renewable obligation based PPAs with SEBs. This represents an important step forward in our strategy to market a significant part of the electricity produced by our assets in merchant models or direct to consumers.
Greenko announces that it intends to release its Preliminary results for the year ended 31 March 2008 on 10 July 2008.
Anil Chalamalasetty, CEO of Greenko, said:
"The signing of this agreement is exciting news for Greenko as this represents a significant increase in tariff without any change to input costs to the company, both for installed capacity and concessions under development. We look forward to announcing the acquisition of further quality assets in the near future which we will look to operate under similar agreements. We expect that we will take advantage of the higher tariff rates available on new schemes rather than buy existing operational schemes under old tariff levels.
The significant uplift in tariff for these PPAs comes at a time when a similar uplift is seen in world markets for the sale of Certified Emission Reduction units ("CERs"). At present CERs are being traded above the level of €20 which marks a significant rise in price over 2007 levels."
Enquiries:
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Greenko Group plc
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Anil Chalamalasetty
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+91 (0)98 4964 3333
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Mahesh Kolli
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+44 (0)7767 692729
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Tim Bowen
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+44 (0)7973 668818
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Arden Partners plc
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Christopher Hardie
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+44 (0)20 7398 1600
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Adrian Trimmings
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Cardew Group
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Rupert Pittman
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+44 (0)20 7930 0777
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Jamie Milton
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Catherine Maitland
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NOTES TO EDITORS
Background
Greenko intends to become a leading owner and operator of clean energy projects in India. The business was developed over an 18 month period prior to incorporation by Anil Chalamalasetty and Mahesh Kolli who incorporated the business at the time of its initial fundraising in January 2006. Greenko currently has 90.5 MW contracted capacity of clean energy assets including six biomass and two hydro plants and 102 MW of concessions under development including three biomass and three hydro plants. The Company is focused on developing a portfolio of biomass, hydro-electric and wind assets within India and intends to increase the installed capacity it operates through a combination of purchasing both existing assets and projects under construction, as well as the 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 existing assets under construction and the building of new plants on greenfield sites. Greenko intends to be a consolidator within this sector. The Directors believe that operational and financial benefits will flow from this strategy.
The Group's income is generated from receipts for power sold to state electricity boards and from the sale of high margin carbon credits or Certified Emission Reduction units ("CERs") generated from the Group's registered clean energy 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 in the voluntary market, will broaden the income streams of the Group as well as enhance profitability.
The Indian economy
India has a population of approximately 1.1 billion people, which is currently growing at 1.5 per cent. per annum, making it one of the largest populations in the world. The average age of the population is 24, providing a growing, well educated workforce. The Indian economy has benefited from low inflation and recent liberalisation has encouraged strong international investment which has helped to promote strong economic growth particularly in the past five years. The growth in industrial production and GDP per capita has resulted in a strong increase in demand for electricity. This has led to a shortfall in supply of supply, resulting in both brown-outs (where the voltage level drops below the normal minimum level specified for the system, therefore particularly damaging to electric motors) and black-outs. In addition, the 2001 Indian Census reported that 44 per cent. of households did not have access to electricity. Due to population growth since 2001 and the existing electricity infrastructure, the Directors believe this may have increased perhaps to as much as 60 per cent. or over 600 million people.
Related Shares:
GKO.L