Opg Power Regulatory News (OPG)

23 October 2012

OPG Power Ventures plc

("OPG" or the "Company")

Trading update

Commercial operating capacity increased to 190MW

Projects on track

OPG Power, the developer and operator of power stations in India presents the following trading update for the half year ended 30 September 2012.

Operations summary

77 MW Chennai I - performing well; planned shutdown taken

The Company's 77 MW Chennai I plant achieved an average Plant Load Factor (PLF) of 87% during the six months ended 30 September 2012. This is lower than the preceding six months as the plant was placed into shut down for 25 days in June 2012 to connect common infrastructure and facilities with Chennai II ahead of the commissioning of that latter unit, whilst also carrying out planned annual maintenance on Chennai I itself. Average PLF for the remainder of the financial year is expected to be approximately 90%.

77 MW Chennai II - operations commenced; ramping up

The Company's 77 MW Chennai II plant commenced operations in September 2012 and following a stabilisation period commercial operations commenced on 10 October 2012. Management expect the plant to gradually ramp up to 85%.

26 MW and 10 MW Legacy units - minority owned; options under evaluation

These are excluded from the table above as, since 1st December 2011, these assets are recognised in the group accounts as non-current asset investments. The aggregate performance and outlook for these assets remains similar to their performance in the prior year. Better availability of gas at the 26 MW Mayavaram plant was offset by higher input pricing whilst load factors fell slightly at the 10 MW waste heat unit. The Company continues to evaluate its options including possibly divesting of its interest in these operations.

The Company's commercially operating capacity is now 190 MW.

Average tariff in H1,13 is 9% higher than H2,12 and 18% higher than H1,12

Taking into account sales to industrial, commercial customers and the SEB, the average tariff achieved on all power sales in the first six months of the financial year was Rs5.67 per kWh, up approximately 9% from H2 12 and 18% compared with the equivalent period in the prior year.

Following a tender process, the Company entered into an arrangement with Tamil Nadu Generation and Distribution Company ("TANGEDCO"), an undertaking of the State Electricity Board ("SEB"), to supply to TANGEDCO 70 MW of generation capacity from each of Chennai I and Chennai II at a tariff of Rs5.50/kWh for the period from June 2012 to May 2013, subject to the usual ratification by the state electricity regulator. The average tariff achieved on sales to SEB in H2,12 was Rs5.05/kWh and for FY12 as a whole was Rs4.77/kWh.

Domestic coal supplies received at Chennai I as committed under linkages; Chennai II to commence shortly

Approximately 35% of the fuel required for Chennai I is being secured through a coal linkage with Coal India Limited and these coal supplies continue to be received. With Chennai II operations now under way, the Company expects to receive further domestic coal supplies under that plant's linkage once customary verification processes are complete early in 2013. In the meantime, the Company imports its remaining coal requirements at a similar landed cost to domestic coal.

Imported coal secured under a term contract until 31 August 2013

The Company has entered into a fixed price contract to purchase its remaining coal requirements from one of its current Indonesian suppliers until 31 August 2013. The supplier is one of Indonesia's largest producers of thermal coal. The price negotiated is expected to reduce the plant gate cost of coal in Dollar terms by at least 10% as compared to the previous contract in place until July 2012, based on all other applicable costs and charges such as freight and duties remaining constant. Given the Company's moving average method of inventory accounting, the benefit of such a saving is expected to largely be realised in FY2014 once currently contracted shipments are fulfilled.

80 MW Chennai III - civil works complete; construction at advanced stage

The Company's 80 MW Chennai III (previously Chennai IV) achieved financial closure in August 2012 with the debt component being financed by a consortium of Indian banks and the project equity being funded internally. The construction of the chimney, civil and electrical works are complete and boiler and turbine erection are on-going and at an advanced stage. The coal handling plant which will be shared with Chennai IV is also nearing completion. The plant is on track to commission in Q2, calendar year 2013.

160 MW Chennai IV

The 160 MW Chennai IV (previously Chennai III) is in the early civil works phase of construction with equipment orders placed and key deliveries expected to commence in H2 2013. The plant shares certain common facilities with 80 MW Chennai III and overall the project remains on track for commissioning in 2014.

300 MW Gujarat

The 300 MW Gujarat project is progressing well with boiler and chimney foundations complete and boiler erection, and electrical works commenced. Delivery of boiler components is on-going. Work continues to be carried out with approvals and permits in place and the Company has taken the additional initiative to adopt air-cooled condensing (similar to the Chennai units) instead of water-cooling in order to reduce requirements to draw sea water. The project remains on track for commissioning in the second half of calendar year 2014.

National economic reforms announced with potential impact upon the Indian power sector and upon OPG

The Government of India has announced debt restructuring assistance to the SEB's, subject to SEB's undertaking reforms on tariff and transmission losses, as part of ongoing measures being taken to improve the SEB's financial positions. Many SEBs, including Tamil Nadu, have accepted the Government's formulations and conditions. Consequently, a further rise in regulated tariffs in Tamil Nadu is possible sometime during the remainder of the current financial year and more likely in the following year. However as the timing and quantum of such increases cannot be reliably determined at present, the Company has not adopted any further potential increases in tariff in its own estimates.

The Government has also introduced reformist measures to improve domestic coal availability over a period of time. The company expects limited short term impact of this upon its operations due to its coastal locations and greater fuel flexibility. However, the removal of 5% import and counter-veiling duties on coal has had a positive effect on landed coal cost.

About OPG

OPG is operating and developing power projects in India under the group captive model with 190 MW in operations and a further 552 MW under development. In the year to 31 March 2012, the Group's revenues were £45.25m and profit before tax was £2.26m.

For further information, please visit www.opgpower.com or contact: