4th Apr 2008 07:01
Rurelec PLC04 April 2008 Rurelec PLC ("Rurelec" or "the Company") Trading Update re Empresa Guaracachi SA Empresa Guaracachi SA Releases Preliminary Results for Year Ended 31 December 2007 Executive President Statement 2007 has been a good year for Guaracachi and I am pleased to report record netincome of US$ 9.63 million (Bs 73.8 million) and revenues of US$ 40.89 million(Bs.313.7 million). This compares with restated net income of US$ 8.13 million(Bs. 62.3 million) and revenues of US$ 35.25 million (Bs. 270.4 million) for thesame period in 2006. Based on these results, which have been prepared underBolivian GAAP, the Board of Guaracachi is recommending to its shareholders adividend of US $7.16 million. The dividend attributable to Rurelec PLC will beapproximately US $3.1 million after deduction of Bolivian withholding taxes atthe rate of 12.5 per cent. Part of this improvement was due to the successful completion of GCH 11, the 71MW nominal capacity General Electric 6FA turbine commissioned and inaugurated inMarch 2007 which has since the middle of the year operated as one of theprincipal gas turbines in both Santa Cruz and in Bolivia. GCH 11 was developedand installed in record time by a joint Anglo-Bolivian team of Guaracachiengineers. Had the unit not been installed on time, Bolivia would most certainlyhave experienced the same kind of power shortages which have afflicted itsneighbours in Argentina, Brazil and Chile. Instead in 2007 Bolivia enjoyed apower capacity reserve margin unparallelled in the Southern Cone of LatinAmerica. Guaracachi is the only private power company to have installed new capacity inrecent years bringing on 8 MW in 2006 and 71 MW in 2007. In 2008 Guaracachi willinstall a further 6 MW nominal capacity in Sucre and an additional 96 MW inSanta Cruz in 2009 in the form of the long-awaited combined cycle gas turbine(CCGT) conversion project, the first in Bolivia. Guaracachi is Bolivia's most environmentally aware power generator. Its smallernew Jenbacher gas engines are the most thermally efficient power productionunits in the country. With a 42 per cent thermal efficiency, they have the lowest emissions of greenhouse gases of any thermal generator. They have replacedolder Worthington and Nordberg reciprocating engines which need to be run partlyon diesel and which consume more fuel for every kilowatt hour of electricitygenerated. Guaracachi's new CCGT unit at Santa Cruz, when completed in 2009, will use thewaste heat from existing gas turbines to produce more power for every unit offuel used. This re-capture of heat, currently being vented into the atmosphere,makes the project eligible for carbon credits under the United Nations CleanDevelopment Mechanism under the Kyoto Protocol. In a ground breaking agreementwith the Vice-Ministry of Land Planning and Environment of the Government ofBolivia, Guaracachi has agreed to share part of the financial benefit of thoseCERs by sponsoring and investing in social programmes for rural electrificationand isolated generation for those communities who today have no access to thenational grid and only limited and sporadic electricity from small dieselpowered generators. Guaracachi's new social programme is the first suchpublic-private partnership in Bolivia. Guaracachi has a very strong balance sheet when compared with most powercompanies in Latin America, the United States or Europe. For this reason thecompany's expansion programme - adding a total of 181 MW in four years between2006 and 2009 - has been accomplished through a combination of Guaracachi's owncash reserves and judicious use of debt. At the end of December 2007, Guaracachiannounced that it had achieved a debt rating with Fitch of A+ (BoC) for itsUS$40 million unsecured bond programme, of which US$ 20 million was issued witha coupon of 8.55 per cent for a ten year maturity, a milestone for any Bolivianpower company. Guaracachi has also reached preliminary agreement with CAF for aUS$20 million project loan for the CCGT expansion with a highly competitiveinterest rate coupon supported by KfW of Germany. Guaracachi enjoys strongdomestic banking relationships with Banco de Credito de Peru, Banco MercantilSanta Cruz, Banco BISa and Banco Economico . Bolivia is growing in importance as a regional energy hub, exporting high levelsof gas to Argentina and Brazil. Guaracachi continues to develop its YacuibaExport Project for exporting electricity to Argentina and hopes to finalise thenecessary fuel supply agreements for this 120 MW project during the course of2008. Guaracachi is exploring further domestic and international power projects inconjunction with its Bolivian and British shareholders and with other overseaspartners. In recent years the company has demonstrated its commitment to environmentalimprovements, not only in terms of emissions reductions in accordance with theKyoto Protocol but also in its noise reductions from existing generationactivities. In 2007 Guaracachi built noise reduction housings around some of its oldestpeaking Frame 5 gas turbines to reduce noise emissions to a level considerablybelow Bolivia's current legal noise level standards. In 2008 Guaracachi ismoving two of its remaining Frame 5 Units to an industrial park in Santa Cruz toform the core of a 40 MW combined heat and power ("CHP") project, using wasteheat to produce steam for industrial users. This will be Bolivia's firstgas-fired CHP and is intended to provide steam for a new soya crushing plant tobe built on site. The Santa Cruz CHP Project will not only reduce noiseemissions at Guaracachi's principal city centre location, for the benefit of itsresidential neighbours, but is also designed to create new CERs from the use ofwaste heat. It will increase the thermal efficiency of the Frame 5 gas turbineswhen operating in CHP mode which should, in turn, allow these units to run asbase load rather than peaking units. Guaracachi is also considering thepossibility of obtaining an extra 20 MW of power capacity from the CHP by afurther conversion to combined cycle. In other areas too, Guaracachi has been acting as a catalyst for social changewith sponsorship of educational, cultural and sporting projects as benefits oneof Bolivia's largest companies. I am proud of the leadership which Guaracachihad demonstrated in 2007 and I look forward to maintaining our policies ofgrowth and innovation in the years to come. Peter EarlExecutive President For further information, please contact: Rurelec PLCPeter Earl/Elizabeth Shaw Tel: 020 7793 5610 Daniel Stewart & Company plcPaul Shackleton Tel: 020 7776 6550 Park Green CommunicationsSimon Robinson Tel: 020 7851 7480 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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