Rurelec PLC Trading Update re Argentina (6114A)
June 02 2021 - 7:42AM
UK Regulatory
TIDMRUR
RNS Number : 6114A
Rurelec PLC
02 June 2021
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 Katy Mitchell
Andy Coveney, Director Lydia Zychowska
Tel: 020 7549 2839/40 Tel: 020 7220 1666
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END
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