TIDMOPG
RNS Number : 5461C
OPG Power Ventures plc
23 February 2022
23 February 2022
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Trading update for Nine Months of FY22
Summary
For the nine months to 31 December 2021:
-- Total generation of 1.55 billion units (1.47 billion units for nine months FY21);
-- Plant Load Factor ("PLF") for the period at Chennai was 57% (54% for nine months FY21);
-- Average tariff for nine months FY22 was Rs 5.53 per kWh (Rs
5.52 per kWh for nine months FY21);
-- Net debt was GBP16.5 million (GBP16.2 million at 31 March 2021);
-- Investment in Atsuya Technologies Private Limited in line
with the strategy to diversify into ESG compliant opportunities and
to reduce and offset carbon emissions;
-- Indian economy is recovering from COVID-19 pandemic and
lockdown; IMF has projected a 9% growth rate for Indian economy in
FY22 against global growth rate projection of 4.4% for CY22.
For further information, please visit www.opgpower.com or
contact:
+44 (0) 782 734
OPG Power Ventures PLC 1323
Dmitri Tsvetkov
Cenkos Securities (Nominated Adviser +44 (0) 20 7397
& Broker) 8900
Stephen Keys / Katy Birkin
+44 (0) 20 7920
Tavistock (Financial PR) 3150
Simon Hudson / Nick Elwes
Operations Summary
Nine Months Nine Months FY
FY22 FY21 31 Mar 2021
Generation (million kWh)
------------ ------------ -------------
414 MW 1,156 1,141 1,701
Additional "deemed" offtake at
Chennai 391 327 406
-------------------------------- ------------ ------------ -------------
Total Generation (MUe)(1) 1,547 1,468 2,107
-------------------------------- ------------ ------------ -------------
Reported Average PLF (%)
------------ ------------ -------------
414 MW 57% 54% 58%
------------ ------------ -------------
Average Tariff Realised (Rs)
------------ ------------ -------------
414 MW 5.53 5.52 5.52
------------ ------------ -------------
Note:
1 MU / Mue - millions units or kWh of equivalent power
Total generation at the Chennai plant, including deemed
generation, in the nine months of FY22 was 1.55 billion units, 5%
higher than in the nine months of FY21.
Average tariffs realised in the period were Rs 5.53 per kWh
(nine months of FY21: Rs5.52 per kWh).
Coal and freight
Over the last several months the prices of thermal coal and
freight have surged primarily due to geopolitical issues in the
region and increased requirement of coal on the back of post
COVID-19 economic recovery. The current year average coal price is
almost double in comparison to the average price for Indonesian
coal over the last ten years.
Whilst OPG was partially covered from increases in prices with
fixed price agreements for coal and freight, the Company remains
exposed to market fluctuations for the unhedged portion of coal
consumption and freight.
In light of this, the Company explored various options including
sourcing coal from other geographies (including domestic sources)
to reduce the per unit cost of electricity. The Company sourced 0.4
million tons of Indian coal at auction in order to replace higher
cost Indonesian coal. In addition, OPG secured procurement of 0.13
million tons per year from Indian mines under a five year contract
which can be converted into a longer-term fuel supply agreement for
ten years, at the option of the Company. The price is fixed for the
term of the contract and is significantly lower than the imported
coal prices. The quantity of domestic coal secured at fixed prices
will meet approximately 25-30% of the Company's requirement for the
first year and 8-10% of annual coal requirements from the second
year onwards.
Deleveraging
In 2018 the Board took the decision to focus on the Company's
profitable, long-life assets in Chennai, and to prioritise the
deleveraging of the business to enhance and increase the value of
shareholders' equity. The Board continues to believe that this
long-term strategy will deliver value to shareholders with free
cash flows providing significant returns and opportunities to grow
the business further.
Net debt comprising total borrowings of GBP45.3 million less
unrestricted cash and cash equivalents of GBP28.8 million was
GBP16.5 million at the end of the period (31 March 2021: GBP16.2
million). The balance of the term loans and NCDs are scheduled to
be fully repaid by Q2 2024.
62 MW Karnataka Solar projects
As previously announced, the Board has decided to sell OPG's
interest in 62MW Karnataka solar projects and these assets remain
in a disposal process.
Environmental, Social and Governance ("ESG") - strategic
Investment in Atsuya Technologies
OPG continues the development of its ESG strategy which, among
other matters, will include the objective of reducing the Company's
carbon footprint. OPG recognises that a comprehensive
decarbonisation strategy is critical to its future. The Company
aims to identify and undertake various initiatives that will reduce
and offset carbon emissions from its operations and to be aligned
with the UN Sustainable Development Goals ("SDGs").
As part of our strategy to diversify into energy savings/ESG
compliant opportunities, the Company made an investment (valued at
less than one per cent of OPG's total assets) to acquire an equity
stake in Chennai-based sustainability solutions provider, Atsuya
Technologies Private Limited ("Atsuya") (www.atsuyatech.com).
An early-stage, but fast-growing venture, Atsuya provides a
suite of innovative engineering solutions to a wide variety of
industries to help them scale up organically while meeting their
sustainability goals. Atsuya's solutions, which cover eight of the
seventeen SDGs, leverage state-of-the-art technologies such as
artificial intelligence, deep tech and the internet of things.
Atsuya's existing clients include new-age Unicorns as well as a
Fortune 500 Indian energy company.
OPG, as a progressive power producer, has been developing its
ESG strategy, with a long-term vision to grow in the renewable and
energy transition technologies sectors. In the short-term, a
strategic investment in Atsuya gives OPG the opportunity to better
align with its sustainability goals, and create value for all
stakeholders. The investment provides OPG with the right to
nominate a director to the Board of Atsuya and for OPG and Atsuya
to work jointly on marketing and selling Atsuya's solutions outside
of India.
Independent of this investment, OPG continues to evaluate
various options to increase its renewable energy asset base,
notably solar power, and to establish joint-ventures to roll out
various energy transition technologies, including energy efficiency
improvements and green hydrogen production. These initiatives will
ensure that OPG delivers its emissions reduction targets in the
medium and long-term.
The Global and Indian Economy and Indian Power Sector
The COVID-19 pandemic has impacted economic growth across the
globe. In a recent IMF report, the global economy is projected to
grow 4.4 percent in CY 2022. The IMF has projected a growth rate
for the Indian economy at 9 per cent for FY22.
During the initial lockdown, the total power consumption in
India reduced by approximately 25 per cent primarily due to
decrease in industrial demand for electricity on account of
COVID-19 restrictions. As the restrictions were eased power
consumption has been seen to be gradually increased. Following the
gradual recovery of the Indian economy, power demand in country is
expected to grow, driven by rising industrial demand. India's power
consumption rose to 100.42 billion units ("BU") in November 2021
compared with 96.88 BU in November 2020 and for December 2021
consumption was 110 BU compared to 106 BU in December 2020.
Outlook
During the first seven months of FY21 to the end of October 2021
the prices of thermal coal and freight have surged primarily due to
the increased requirement for coal and other goods as a result of
post COVID-19 economic recovery. However, coal prices have
decreased significantly since the peak in October 2021 and the
Company anticipates that coal prices will normalise over time.
As previously reported, due to the negative impact of higher
coal prices and freight costs the Group's plants will be operating
at a lower capacity for the remainder of FY22 and revenue and net
profit will reduce in comparison with FY21.
OPG believes that the medium and long-term fundamentals of the
Group remain unchanged and post-COVID-19 recovery, as well as the
normalisation of coal prices and freight costs, the Company expects
to continue to prosper as management seeks to deliver its long
term, profitable and sustainable business model. OPG will also
continue to focus on advancing its ESG strategy and our maiden
investment in Atsuya is the first step in the Group's ESG
development and focus on ESG compliant projects.
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END
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Grafico Azioni Opg Power Ventures (AQSE:OPG.GB)
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