11th October 2004
Rurelec today announces that it has purchased its first power plant equipment for isolated generation of electricity in Bolivia.
As disclosed in its Admission Document dated 18 August 2004, Rurelec entered into an option agreement with Empresa Guaracachi SA ("EGSA") to acquire Energia para Sistemas Aislados SA ("ESA"), an electricity generating company, which owned a portfolio of power generating assets including, inter alia, seven reciprocating engines of Worthington and Nordberg manufacture (the "Option Agreement"). The Option Agreement was conditional upon the power plants being released from their current licences to generate electricity for Bolivia's national grid.
Due to the increase in electricity demand on the national grid in Bolivia, with power demand in the east of the country growing well ahead of the national rate, EGSA is able, at this stage, to release two out of the seven planned power generating machines, representing 6MW of power. Rurelec has therefore allowed the Option Agreement with EGSA to lapse and has entered into new arrangements for the acquisition of the machines.
Rurelec has agreed to acquire ESA, which now only holds the two Worthington reciprocating dual fuel engines immediately available, for a total cash consideration of US$50,000 and the assumption of an obligation to make approximately US$60,000 per annum of long term payments to the Central Bank of Bolivia with a final maturity of 2022. The book value of the machines at 30th September was US$268,851. The purchase will be financed out of Rurelec's existing cash facilities and has been contracted at a lower price than originally anticipated In accepting the offer EGSA has also agreed to give Rurelec a right of first refusal for up to two years over the five remaining machines as and when they are released from their licences. The next review date for the release of three of these machines from generating licences is in May 2005.
Rurelec expects its first Bolivian power plants to be installed in the cities of Trinidad and Yacuiba and is in advanced negotiations with fuel suppliers for both cities. Rurelec is entering into negotiations with other suppliers of generating equipment for use in isolated areas in central and southern Bolivia in order to accelerate its planned roll out of new capacity to meet unsatisfied demand in the rural areas.
This is the first step for Rurelec towards achieving its goal of building a rural electrification business in Bolivia and surrounding countries and the Board expects to announce further transactions over the coming months.
Peter R. S. Earl
For further information contact:
Peter R. S. Earl
Tel: +44 (0)20 7793 7676
Rurelec PLC is a British company established to develop rural electrification projects in Latin America. It is managed by a team with a strong track record in developing power projects worldwide and with considerable experience in the electricity sector in Latin America.
Rurelec has two principal businesses:
-Ownership of power generation facilities in isolated areas
-Management of rural electrification expansion projects funded by the World Bank or multi-lateral development agencies.
Rurelec recently floated on the AIM market of the London Stock Exchange.