LONDON (Alliance News) - Power generator Rurelec PLC Tuesday said its pretax loss widened in the first half of the year due to the devaluation of the Argentine peso against the pound in January, although its Argentine revenue rose in local currency terms.
The company, which has operations in Argentina and is developing operations in Chile and Peru, spent most of the first half concentrating on fighting the government of Bolivia for compensation after its assets in that country were nationalised. It finally got a settlement of GBP19.1 million, much less than it had expected after a four-year battle for compensation.
Rurelec posted a pretax profit of GBP2.1 million for the six months to June 30, much wider than the GBP40,000 loss it reported a year earlier, as revenue fell to GBP4.3 million, from GBP6.1 million, due to the devaluation of the Argentine peso against sterling, which knocked GBP1.8 million off its revenue.
Most of its revenue came from the Energia del Sur SA subsidiary. EdS, in which Rurelec has a 50% stake, has a combined cycle plant in Patagonia. Its revenue in pesos were ARG110 million, up from ARG100 million, and cost of sales also fell because its fuel supplies are now contracted and paid directly by CAMMESA, the national organisation which manages the electricity network in recompense for the low spot prices locally, saving Rurelec GBP1.1 million.
"Operationally we have had a good year in Argentina only spoilt by the currency devaluation in January. We continue to believe that the prospects for Argentina are excellent," Rurelec Chief Executive Peter Earl said in a statement.
In Chile, Rurelec's two projects for a combined 295 megawatts are nearing completion. Financial close is expected in the first quarter of 2015, and the company is still considering offers for 50% of both projects.
It is also in the final stages of building a hydroelectric plant in Peru and expects construction to start on a second plant in the fourth quarter.
"Rurelec is currently negotiating partnership arrangements covering both small and large hydros in Peru. This is significant since Rurelec has recently been informed by the government of Peru that the long anticipated Proinversion tender process for large hydro power purchase agreements will finally be announced at the start of October. Rurelec owns the 255 MW run-of-river Santa Rita project in Ancash Province which is expected to be one of the leading contenders for a large hydro PPA," it said.
It is also finalising partnership arrangements in Latin America to permit a more rapid roll-out of new generation capacity with large co-investors.
Rurelec shares were down 7.1% at 5.22 pence Tuesday afternoon.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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