Language
4th April 2008
Executive President Statement
2007 has been a good year for Guaracachi and I am pleased to report record net income of US$ 9.63 million (Bs 73.8 million) and revenues of US$ 40.89 million (Bs.313.7 million). This compares with restated net income of US$ 8.13 million (Bs. 62.3 million) and revenues of US$ 35.25 million (Bs. 270.4 million) for the same period in 2006. Based on these results, which have been prepared under Bolivian GAAP, the Board of Guaracachi is recommending to its shareholders a dividend of US $7.16 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.
Part of this improvement was due to the successful completion of GCH 11, the 71 MW nominal capacity General Electric 6FA turbine commissioned and inaugurated in March 2007 which has since the middle of the year operated as one of the principal gas turbines in both Santa Cruz and in Bolivia. GCH 11 was developed and installed in record time by a joint Anglo-Bolivian team of Guaracachi engineers. Had the unit not been installed on time, Bolivia would most certainly have experienced the same kind of power shortages which have afflicted its neighbours in Argentina, Brazil and Chile. Instead in 2007 Bolivia enjoyed a power capacity reserve margin unparallelled in the Southern Cone of Latin America.
Guaracachi is the only private power company to have installed new capacity in recent years bringing on 8 MW in 2006 and 71 MW in 2007. In 2008 Guaracachi will install a further 6 MW nominal capacity in Sucre and an additional 96 MW in Santa Cruz in 2009 in the form of the long-awaited combined cycle gas turbine (CCGT) conversion project, the first in Bolivia.
Guaracachi is Bolivia's most environmentally aware power generator. Its smaller new Jenbacher gas engines are the most thermally efficient power production units in the country. With a 42 per cent thermal efficiency, they have the lowest emissions of greenhouse gases of any thermal generator. They have replaced older Worthington and Nordberg reciprocating engines which need to be run partly on diesel and which consume more fuel for every kilowatt hour of electricity generated.
Guaracachi's new CCGT unit at Santa Cruz, when completed in 2009, will use the waste heat from existing gas turbines to produce more power for every unit of fuel used. This re-capture of heat, currently being vented into the atmosphere, makes the project eligible for carbon credits under the United Nations Clean Development Mechanism under the Kyoto Protocol. In a ground breaking agreement with the Vice-Ministry of Land Planning and Environment of the Government of Bolivia, 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.
Guaracachi has a very strong balance sheet when compared with most power companies in Latin America, the United States or Europe. For this reason the company's expansion programme - adding a total of 181 MW in four years between 2006 and 2009 - has been accomplished through a combination of Guaracachi's own cash reserves and judicious use of debt. At the end of December 2007, Guaracachi announced that it had achieved a debt rating with Fitch of A+ (BoC) for its US$40 million unsecured bond programme, of which US$ 20 million was issued with a coupon of 8.55 per cent for a ten year maturity, a milestone for any Bolivian power company. Guaracachi has also reached preliminary agreement with CAF for a US$20 million project loan for the CCGT expansion with a highly competitive interest rate coupon supported by KfW of Germany. Guaracachi enjoys strong domestic banking relationships with Banco de Credito de Peru, Banco Mercantil Santa Cruz, Banco BISa and Banco Economico .
Bolivia is growing in importance as a regional energy hub, exporting high levels of gas to Argentina and Brazil. Guaracachi continues to develop its Yacuiba Export Project for exporting electricity to Argentina and hopes to finalise the necessary fuel supply agreements for this 120 MW project during the course of 2008.
Guaracachi is exploring further domestic and international power projects in conjunction with its Bolivian and British shareholders and with other overseas partners.
In recent years the company has demonstrated its commitment to environmental improvements, not only in terms of emissions reductions in accordance with the Kyoto Protocol but also in its noise reductions from existing generation activities.
In 2007 Guaracachi built noise reduction housings around some of its oldest peaking Frame 5 gas turbines to reduce noise emissions to a level considerably below Bolivia's current legal noise level standards. In 2008 Guaracachi is moving two of its remaining Frame 5 Units to an industrial park in Santa Cruz to form the core of a 40 MW combined heat and power ("CHP") project, using waste heat to produce steam for industrial users. This will be Bolivia's first gas-fired CHP and is intended to provide steam for a new soya crushing plant to be built on site. The Santa Cruz CHP Project will not only reduce noise emissions at Guaracachi's principal city centre location, for the benefit of its residential neighbours, but is also designed to create new CERs from the use of waste heat. It will increase the thermal efficiency of the Frame 5 gas turbines when operating in CHP mode which should, in turn, allow these units to run as base load rather than peaking units. Guaracachi is also considering the possibility of obtaining an extra 20 MW of power capacity from the CHP by a further conversion to combined cycle.
In other areas too, Guaracachi has been acting as a catalyst for social change with sponsorship of educational, cultural and sporting projects as benefits one of Bolivia's largest companies. I am proud of the leadership which Guaracachi had demonstrated in 2007 and I look forward to maintaining our policies of growth and innovation in the years to come.
Peter Earl
Executive President
For further information, please contact:
Peter Earl
Managing Director Tel. 020 7793 5610
Paul Shackleton
Daniel Stewart & Company Tel. 020 7776 6578
Simon Robinson
Park Green Communications Tel. 020 7851 7480