Last checked at 27 Apr 2009 07:00
Rurelec PLC
("Rurelec" or "the Company")
Trading Update re Empresa Guaracachi SA ("Guaracachi")
The following is a translation of the Executive President's report from the Accounts for the year to 31 December 2008 for Guaracachi, which was released to the Stock Exchange in La Paz on Friday 24 April 2009:
"2008 has been yet another good year for Guaracachi and I am pleased to report record net income of US$10.25 million and revenues of US$45 million. This compares with net income of US$9.63 million and revenues of US$42 million in 2007. Based on these results, which have been prepared under Bolivian GAAP, the Board of Guaracachi is recommending to its shareholders a dividend of US$7.05 million. The dividend attributable to Rurelec PLC will be approximately US$3.1 million after deduction of Bolivian withholding taxes at the rate of 12.5 per cent.
Guaracachi is the only private power company to have installed new capacity in recent years bringing on 8 MW in 2006, 71 MW in 2007 and a further 6 MW in 2008 with the completion of commissioning of three more Jenbacher 616 gas engines at Sucre during the course of the year.
However the largest new capacity project of all, while Guaracachi has been under the majority control of Rurelec PLC of the United Kingdom, is the 96 MW combined cycle gas turbine (CCGT) conversion and expansion project now under construction in Santa Cruz and due for completion towards the end of 2009. This is the first CCGT plant to be installed in Bolivia. Upon commissioning, Guaracachi will have 238 MW of CCGT capacity in operation. The installation of the 96 MW steam turbine and associated boilers is the single largest power generation unit ever to be brought on line in Bolivia. The cost of the project is now set at US $68 million.
Guaracachi's new CCGT unit at Santa Cruz will use the waste heat from existing gas turbines to produce more power for every calorie of fuel used. This re-capture of heat currently being vented into the atmosphere makes the project eligible for CER carbon credits under the United Nations Clean Development Mechanism under the Kyoto Protocol. Guaracachi has agreed to share part of the financial benefit of those CERs by sponsoring and investing in social programmes for rural electrification and isolated generation for those communities who today have no access to the national grid and only limited and sporadic electricity from small diesel powered generators. Guaracachi's new social programme is the first such public-private partnership in Bolivia.
As these results are released to shareholders, Guaracachi is close to completing another step in its development. This has involved the transfer of two Frame 5 gas turbines with a total capacity of 40 MW from the main Santa Cruz generation plant to the parquet industrial. This project was originally undertaken to free up space for the installation of the cooling units associated with the CCGT plant. However it has also provided an opportunity to create Guaracachi's first combined heat and power project, providing steam to industrial users at the industrial zone. Guaracachi will be looking to develop its steam raising capacity during the course of the current year and is now actively seeking joint venture partners for this important expansion of its core business.
In spite of the uncertainty of the current global Credit Crunch, Guaracachi has a very strong balance sheet when compared with most power companies in Latin America, the United States or Europe. This is reflected in the strong credit rating which the Company has won from the credit rating agency Pacific Credit Ratings which has rated Guaracachi's latest issue of bonds at AA+. An issue of US$20.2 million was successfully placed.
During the year, Guaracachi reached financial close with Corporacion Andina de Fomento (CAF) for a US$20 million project loan for the CCGT expansion with a highly competitive interest rate coupon supported by the German government's KFW development agency. Guaracachi pays a spread of 304 basis points over six month dollar LIBOR on this loan which has a 10 year maturity.
Guaracachi continues to enjoy excellent banking relationships with Bolivia's leading banks including, Banco BISA, Banco Mercantil Santa Cruz, Banco Economico, Banco Ganadero and Banco Union. It is significant that while commercial banks in Europe and the United States have halted or cancelled new corporate credits as a result of their own balance sheet and liquidity problems, Bolivia's banks have been solidly supportive of their industrial clients such as Guaracachi and have continued to provide the liquidity Bolivia needs to grow its economy. We thank those banks for their confidence and their excellent support.
Guaracachi has continued to sponsor educational, cultural and sporting projects. We believe in the value of community and we are proud to support the best of Bolivia. We look forward to a bright future of helping Bolivia to grow and to meet all of its aspirations.
I would like to thank all of the staff and management of Guaracachi who have worked harder than ever in 2008 to keep adding new generation capacity, linked with safe and reliable operation of our existing 445 MW of turbines and engines, in order to power the electricity needs of the nation. Truly Guaracachi is the Energy of Bolivia."
For further information, please contact:
Rurelec PLC
Peter Earl, Managing Director Tel: 020 7793 5610
Daniel Stewart & Company PLC (NOMAD)
Paul Shackleton/Tessa Smith Tel: 020 7776 6550
Religare Hichens Harrison
Daniel Briggs Tel: 020 7382 7776