(Alliance News) - Rurelec PLC on Friday said it has received another USD1.4 million of loan repayment from Patagonia Energy Ltd, but noted fears around changes to the energy spot market in Argentina.
Shares in South America-focused power generator Rurelec were down 25% at 0.43 pence in London in morning trade.
The remaining USD21.3 million of the loan is to be split between Rerelec and ultimate Patagonia Energy shareholder Basic Energy Ltd, with Rurelec taking 80% of the first USD5 million and Basic Energy 20%, while the rest is split 72% to Rurelec and 28% to Basic Energy.
As such, the total loan owed to Rurelec by Patagonia Energy is now USD15.5 million.
Nonetheless, Rurelec noted that while it has been agreed how funds generated by Patagonia Energy "will be distributed", it is uncertain when such payments will be made.
Factors which influence the timing of repayment include cash generation by Argentina power project operator Energia del Sur SA and how long the exchange controls restricting Energia del Sur's ability to transmit funds to Patagonia Energy last. These controls also increase the money conversion cost of such transfers.
Rurelec said "delays being experienced by electricity generators in Argentina in receiving payments of revenue from CAMMESA" or Compania Administradora del Mercado Mayorista Electrico, could also limit repayment. CAMMESA regulates and administrates the Argentinian wholesale electricity market.
On top of this, Rurelec noted an "increased foreign exchange risk" for the company resulting from the Argentinian government's announcement "that revenue deriving from the electricity generated by [Energia del Sur] from its gas turbines and sold on the energy spot market will no longer be linked to the US Dollar but to the Argentinean Peso retroactively to February 2020 and will be updated monthly from March 2020."
However, revenue from Energia del Sur's resolution 220/2007 power purchase agreement covering 43.7 megawatts of electricity will remain US dollar-linked.
This power purchase agreement expire September 2020 to be superseded by a new tariff or, in what Rurelec called a "worst case", "sold on the energy spot market".
"The remuneration level of that tariff/[power purchase agreement] is the subject of ongoing discussions with CAMMESA, the outcome of which is currently uncertain. There is no guarantee that those terms will be favourable to [Energia del Sur] or that, as a consequence of these changes, EdS will remain economic although the directors remain optimistic as to a sensible resolution. Further updates will be provided in due course.," said Rurelec.
By Anna Farley; annafarley@alliancenews.com
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Rurelec (RUR)