Trading Update

RNS Number : 0698Y

OPG Power Ventures plc

24 February 2012

 



OPG Power Ventures plc

(the "Company")

Trading Update

The Company provides the following update since its interim results, released on 14 December 2011.

77 MW Chennai I performing strongly

The Company's flagship 77 MW Chennai I plant has continued to perform well, consistently achieving average load factors of over 90 per cent during the second half of the year. 

The Company holds 99% ownership interest in this flagship plant.

77 MW Chennai II - remains ahead of schedule, on-site trials to commence shortly

The Company has made good progress on this 77 MW project, a replica of Chennai I, with all critical equipment in place and construction and erection activities at an advanced stage.  On-site equipment trials are expected to begin by March 2012 and commissioning activities are expected to commence thereafterby Q2, 2012.

80 MW Chennai IV currently ahead of schedule

Major construction activities for Chennai IV including boiler erection are underway and at this mid-construction stage, whilst the expected commissioning date is not being changed, the project as a whole is ahead of schedule.

160 MW Chennai III on track

Equipment procurement has now been initiated for Chennai III and construction activities are expected to commence shortly on this project. This plant remains on track for commissioning in 2013.

300 MW Gujarat project on track for 2013 commissioning

At the time of its interim results, OPG continued to outline certain local objections received in connection with its Gujarat project that were under resolution. According to the Company's legal advisers, a significant order handed to the Company by the National Green Tribunal ("NGT") on 14 February 2012, upholds the validity of all environmental and other clearances previously obtained on the project.  Accordingly construction has continued and the project remains on track for commissioning in 2013. 

Proportional impact of 10 MW and 25 MW legacy plants expected to decline

The previously reported underperformance of the Group's 10 MW waste heat plant and 24.5MW gas fired plant has continued on account of sustained poor availability of waste heat and natural gas.   The Company holds minority interests in both units (33% and 44% respectively) but consolidates the results of their operations in full.  Whilst the Company continues to review its long term strategy for these units, their performance is expected to lead to results for the current period being below management's expectations with such performance levels expected to continue into the subsequent financial year with the added effect of a 15% increase in gas prices going forward.  However, as additional capacity is brought online, the proportional impact of these legacy assets upon consolidated results and earnings is expected to decline and to be almost negligible in the subsequent years. 

Current period results are also likely to be affected by a one-off provision for certain historic costs of £0.8m.

Fuel Supply Arrangements

Chennai II has long term fuel Supply agreement with Coal India Limited ("CIL").  In addition the Company has entered into arrangements with an overseas supplier to further ensure coal security for all of its operations during calendar year 2012 at competitive pricing levels.

The Tamil Nadu state regulator is expected to make its tariff order by 25 March 2012

In connection with a petition filed by the state electricity board ("SEB") with the state tariff regulator on 25 November 2011 and in accordance with the timelines set out under the Electricity Act 2003, the Company expects the regulator to issue its order by 25 March 2012 and a further update will be provided once it is available.  In its petition the SEB is seeking a 25% increase in industrial tariff, a fuel surcharge and the establishment of annual reviews. Once the new tariff order is implemented, the Board expects the Company's current trading environment will improve.

In relation to the update chief executive Arvind Gupta commented: "2012 is an important year for the de-risking of our project portfolio and good progress has already been made at both major locations.  In particular over 150 MW of new capacity at Chennai, that is currently ahead of schedule, augments our existing flagship 77 MW operating unit and gives us continued momentum towards our target of 1,250MW by 2015. The macro outlook for power generators is good. India continues to have a strong demand for power well in excess of supply. The increase in industrial tariff and the introduction of fuel surcharge will offer generators protection from fuel price fluctuation.  I look forward to reporting on further project developments in the coming months."

About OPG

OPG isoperating and developing power projects in India under the group captive model with 113 MW in operations and a further 742 MW under development. In the six months ended 30 September 2011, from its unaudited interim results, the group's revenues were £23.85 m and profit before tax was £3.03m.

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

OPG Power Ventures plc	[phone]
Arvind Gupta (Managing Director)
V. Narayan Swami (Finance Director)
Cenkos Securities (Nominated Adviser & Broker)	[phone]
Stephen Keys/ Camilla Hume
Tavistock Communications	[phone]
Simon Hudson / Sonya Williams

 

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