Interim Results for the six months ended 30 June 2008 from Latin American power plant developer and operator, Rurelec, made interesting reading on an otherwise choppy day for global markets.
Financial highlights included a 14% increase in revenues to £11.95 million, earnings per share climbed 7% to 0.15 pence and Net Asset Value per share climbed 10.5% to 52.5 pence. The company did report a reduction in profits after tax at £0.84 million, but said it believed over the full year it would make up for the lower net income. Rurelec’s plants tend to generate more revenues in the second half of the year when it is winter in the southern hemisphere. The company also said it was squeezed by a rise in gas prices, but a lag in those prices being passed into the wholesale power market.
Rurelec completed a number of significant transactions in the first half of 2008, including the acquisition of the remaining 50% of Energia del Sur (‘EdS’), which operates a power plant in Argentina. EdS in turn also completed the process of certifying its power plant for carbon credits which are expected to generate up to US$3 million per annum.
In Bolivia, where Rurelec has a 50% interest in the country’s largest power company, Guaracachi, financing was secured to covert a gas fired plant to combined cycle, which would boost capacity to 96MW. Guaracachi has also applied for carbon credits for this project.
Peter Earl, Rurelec's Chief Executive, summarised:
“At the time of writing, both equity and debt market conditions worldwide continue to be nervous. The good news of Argentina's decision to repay all of its Paris Club debt went largely unnoticed against the bad news of the collapse of investment banking giants such as Lehman Brothers and Merrill Lynch which occurred within days of the former announcement.
As a result of the meltdown in global credit markets, the Latin American debt markets remain closed to borrowers such as EdS and Rurelec. This will leave Bolivia as the bright spot in Rurelec's expansion territories. In spite of reports to the contrary, Bolivia is stable and growing at higher rates of economic GDP growth than at any time for a decade.
Rurelec was instrumental in introducing Gazprom, Russia's principal gas company, to Bolivia over the last twelve months. In the middle of September, Gazprom signed an agreement with the Government of Bolivia and announced that it is to invest US $4.5 billion in expanding Bolivian gas production by between 13 million and 26 million cubic meters of gas a day. This increase is sufficient to run between 2,400 MW and 4,800 MW of new gas fired combined cycle power generation capacity. This announcement too went largely unnoticed.”