OPG Power Ventures plc Long Term Variable Tariff Arrangement Chennai III (6268Y)
January 28 2014 - 2:00AM
UK Regulatory
TIDMOPG
RNS Number : 6268Y
OPG Power Ventures plc
28 January 2014
28 January 2014
OPG Power Ventures plc
("OPG" or the "Company")
Long Term Variable Tariff Arrangement for 80 MW Chennai III
Unit
OPG Power Ventures PLC, the developer and operator of power
generation plants, is pleased to announce that it has entered into
a long term variable tariff arrangement ("the LTVT arrangement")
with the Tamil Nadu State Electricity Utility, TANGEDCO for the
sale of 74 MW of its capacity from its 80 MW Chennai III unit
("C3"). Under the 15 year arrangement, commencing on 1 January
2014, the Company will benefit from foreign exchange protection on
coal purchases as well as protection against inflation on certain
inland logistics costs.
Foreign exchange protection on imported coal at C3
Prior to the LTVT arrangement, most of C3's output was sold to
TANGEDCO under a fixed, Rupee denominated, one year tariff
agreement of Rs5.50 per kWh due to expire in May 2014 ("the Short
Term Fixed Tariff Arrangement" or "STFT"). Whilst carrying both the
risk and reward of any revisions in tariff beyond May 2014, the
STFT type of arrangement does not offer any predictable or long
term protection against foreign exchange fluctuations on input fuel
or international freight costs.
The LTVT allocates the risk and reward of currency movements on
the cost of purchasing as well as international freight on such
coal, to the power purchaser. Since the Company's plants are
designed to utilise a broad range of coals of different
specifications efficiently, which also have varying price
volatilities, the Company has secured this currency protection in
relation to one-third of its current output. In addition, the LTVT
incorporates protection against escalation in certain
transportation and logistics costs.
Tariff estimate at current exchange rates
At the currently prevailing exchange rate, the current tariff
receivable by the Company under the LTVT is expected to be Rs 5.51
per kWh with a change of Rs 1 against the US dollar leading to a
corresponding change in tariff of Rs 0.05 per kWh.
Arvind Gupta, Chief Executive commented: "In recent years the
power industry in India has been buffeted by volatility in input
costs and foreign exchange rates. The Board believes entering into
the LTVT arrangement is opportune and adds diversity in our sales
mix at tariffs that are expected to be attractive and further
provides a long term basis for mitigating some of the volatility
that exists in our industry. We expect this combination to be good
for shareholder returns."
For further information, please visit www.opgpower.com or
contact:
+91 (0) 44 429 11
OPG Power Ventures PLC 211
Arvind Gupta
V Narayan Swami
Cenkos Securities (Nominated Adviser +44 (0) 20 7397
& Broker) 8900
Stephen Keys / Camilla Hume
+44 (0) 20 7920
Tavistock Communications 3150
Simon Hudson / James Collins
Disclaimer
This announcement does not constitute or form part of any offer
or invitation to sell or issue, or any solicitation of any offer to
purchase or subscribe for any securities. The making of this
announcement does not constitute a recommendation regarding any
securities. Certain statements, beliefs and opinions contained in
this announcement, particularly those regarding the possible or
assumed future financial or other performance of OPG, industry
growth or other trend projections are or may be forward looking
statements. Forward-looking statements can be identified by the use
of forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in
each case, their negative or other variations or comparable
terminology. These forward looking statements include all matters
that are not historical facts. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and may be beyond OPG's ability to control or predict.
Forward-looking statements are not guarantees of future
performance. No representation is made that any of these statements
or forecasts will come to pass or that any forecast result will be
achieved. Neither OPG, nor any of its associates or directors,
officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in
any forward-looking statements in this announcement will actually
occur. You are cautioned not to place reliance on these
forward-looking statements. Other than in accordance with its legal
or regulatory obligations, OPG is not under any obligation and OPG
expressly disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
No statement in this announcement is intended as a profit
forecast or a profit estimate and no statement in this announcement
should be interpreted to mean that earnings per OPG share for the
current or future financial years would necessarily match or exceed
the historical published earnings per OPG share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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