Last checked at 2 Jun 2021 12:42
2 June 2021
Rurelec PLC
("Rurelec" or the "Company")
Trading Update re Argentina
Further to the announcement of 20 May 2021, the Directors of Rurelec PLC (AIM: RUR) provide the following update on Energia del Sur, S.A. ("EdS"), the Argentinian powerplant owned by Patagonia Energy Limited ("PEL") in which Rurelec has a 50% holding. The Argentinian Secretary of Energy has announced a new tariff under Resolution SE 440/2021 ("Resolution 440") which replaces Resolution SE 31/2020 ("Resolution 31") that governs Spot prices. This impacts the price at which EdS can charge for the electricity it generates.
Resolution 440 introduces the following changes to the existing Resolution 31 tariff:
· Spot generation tariffs increased by 29% on average. This increase will be retroactively applied from February 2021.
· Spot prices are no longer linked to the US Dollar, but instead are linked to the Argentine peso.
· Steam turbine and gas turbines capacity and offtake revenue are both now remunerated under the Resolution 440 tariff. Previously just gas turbine offtake was remunerated under Resolution 31.
Despite the increases in Resolution 440, the income generated under this new tariff will be significantly lower than under Resolution 220. Resolution 220 applied to the steam turbine offtake. It expired in September 2020, after which steam turbine output has been subject to Resolution 31 Spot tariffs. Accordingly, the Directors anticipate that EdS's revenue will be significantly adversely impacted by this change.
The adverse overall impact of the tariff changes may, however, improve following the conclusion of the "enhanced tariff" negotiations which are taking place between EdS management and the Argentinian Secretariat of Energy, albeit there is no certainty when these negotiations will be concluded or what their impact will be. Until then, EdS's revenue and cash generation will continue to be affected, which in turn will influence the timing and amounts of any cash payments from EdS to PEL and ultimately to Rurelec.
As a consequence of these changes Rurelec will continue to experience working capital pressure.
The Board continues to explore potential funding opportunities including the sale of its other assets, and in particular, the Frame 6B turbine in Chile and the 701 turbines situated in Italy.
For further information please contact:
Rurelec PLC | W H Ireland (Nomad & Broker) |
Simon Morris, Director Andy Coveney, Director | Katy Mitchell Lydia Zychowska |
Tel: 020 7549 2839/40 | Tel: 020 7220 1666 |