OPG Power Ventures : Trading Statement



26th August 2014

OPG Power Ventures plc

("OPG", the "Group" or the "Company")

Trading update for the three months ended 30th June 2014

OPG Power Ventures plc, the developer and operator of power generation plants, announces its trading update for the three months ended 30th June 2014 ("Q1 FY15").

Operational highlights - a stronger operating platform

·   Achieved average Plant Load Factor (PLF) of 93% in Q1 FY15

·   Q1 FY15 generation up 31% from the comparable period in the prior year

·   Average tariff realised Rs5.56 per kWh

·   Fixed price coal contract secured for all imported coal at our current operating units until March 2015

·   Ten year minimum freight arrangement and joint venture with Noble Chartering to hedge freight on current operating units

·   ICRA long term credit rating raised to A- from BBB+

Project highlights - continuing to transform the scale of our operating platform

·   On track to commence commissioning in Q3 FY15

·   300MW Gujarat - phased commissioning trials expected to commence in November 2014

·   180MW Chennai IV - hydraulic testing completed; commissioning trials expected to commence in Q3 FY15 

Operations summary

Parameter	Quarter ended 30 Jun 14	Quarter ended 31 Mar 14	Quarter ended 30 Jun 13	Year ended     31 Mar 14
Generation (Mn units)
Chennai I	148	153	167	646
Chennai II	169	156	163	668
Chennai III	160	171	33	527
Total (Mn units)	477	480	363	1,841
PLF (%)
Chennai I	88	92	99	96
Chennai II	100	94	97	99
Chennai III	92	99	69	92
Average (%)	93	95	95	96
Tariff (Rs/kWh)	5.56	5.54	5.65	5.55

Power generated during the period was 31% ahead of the comparable period in the prior year and load factors were above expectations and significantly in excess of nationwide industry norms.  The Chennai I plant underwent a planned maintenance shutdown for three weeks in July 2014 and the plant has now returned to normal operation. 

Attractive tariffs realised

In addition to its 15 year Long Term Variable Tariff agreement with TANGEDCO for 74MW, the Company continued to sell its output to a mixture of TANGEDCO and industrial customers on short term arrangements. The average tariff realised for the three months ended 30 June 2014 was Rs5.56 per kWh.

Fixed price coal contract for imports at our current operating units until March 2015

OPG has entered into a fixed price contract for imported coal to service all of its imports at Chennai I, II and III until March 2015.  Whilst this new agreement allows the Company to achieve a lower price to import coal than has been typically achieved in previous years, the Directors realise that recently introduced levies and increases in transportation costs may offset much of these savings.

Ten year (minimum) freight arrangement and JV with Noble to hedge freight costs

As announced by the Company on 6 August 2014, OPG has entered into a joint venture arrangement ("JVA") with Noble Chartering to secure attractive long term rates for its international freight from 2017 onwards. These rates are expected to be lower than long term contract rates that are otherwise available to the Company.  The arrangement caters for all of the Company's international freight requirements at Chennai I, II and III. 

Credit rating enhanced

India's leading debt rating agency, ICRA, has enhanced its credit rating of OPG from BBB+ to A- .

Projects - construction nearing completion and on schedule to commence trial commissioning

Provided below is a quantified assessment of the progress of the Company's current and most significant projects as at 31st July 2014. This is based purely on management's experience and not verified by any third party and is presented by reference to each of the key stages in a typical project in development.  It is a management estimate as at 31st July 2014 only and does not purport to quantify the risk of any project not being commissioned.

Project/stage	Financing	Civil Works and Foundations	Chimney/Boiler related/Rest of plant
Chennai IV unit	100%	100%	70%
Gujarat plant	100%	100%	90%

300MW Gujarat - both 150MW units - equipment assembly complete, testing ongoing, commissioning trials can commence in the next quarter - transmission lines in progress

The construction of Gujarat's Unit A (150 MW) and Unit B (150 MW) has been completed and with equipment testing now ongoing, commissioning trials for Unit A are expected to commence in November 2014 and Unit B to follow thereafter by December 2014.

Gujarat Energy Transmission Corporation Limited ("GETCO") is constructing a new multi circuit transmission line to facilitate evacuation of power from both units and have now informed us that the line is expected to be completed by March 2015. We are assisting them with certain construction activities on the line. In the meantime GETCO have told us they are making available to us an alternative double circuit transmission line, the construction of which is already nearing completion.  Accordingly, with our plant now ready to move into commissioning trials as scheduled, we are intending to perform a phased commencement of commercial operations from November 2014 as GETCO progressively make the required transmission infrastructure available to us.

180MW Chennai IV - hydraulic testing completed and early phase of equipment trials started

Hydraulic testing of this new unit was successfully completed in June 2014 and assembly of the turbine and generator is underway.  OPG has now moved into the first phase of equipment trials and commissioning trials are expected to commence by November 2014.  Chennai IV shares significant infrastructure with the other units at the same location and power sales are expected to be similarly mixed between the state and industrial and commercial customers on flexible or short term arrangements. 

Outlook

Following the election of a new Government, the Indian macro environment appears to have accelerated towards a recovery phase.  In its first few weeks, the new Government seems to have put the importance of the power sector beyond doubt in terms of it being a basic need for all citizens but also for its importance in re-establishing economic growth.  Early signs of some positive momentum to make the sector more attractive for investment have come through in the recent Budget.  Accordingly, the long term commercial dynamics of the sector remain attractive. 

As can be observed from our activities during the quarter, OPG has remained focused on maximising its existing operations and upon delivering on the current project portfolio of 480MW to nearly treble the size of the Group's operating platform.  These activities, as well as planning for the next growth phase, continue apace and current trading continues to be in line with expectations.

For further information, please visit www.opgpower.com or contact:

OPG Power Ventures PLC	[phone]
Arvind Gupta
V Narayan Swami Ajay Paliwal
Cenkos Securities (Nominated Adviser & Broker)
Stephen Keys / Mark Connelly / Callum Davidson	[phone]
Tavistock Communications
Simon Hudson / James Collins	[phone]

About OPG

OPG is operating and developing power projects in India under the group captive model with 270 MW in operation and a further 480 MW under development.  In the year ended 31 March 2014, the Company generated revenues of £99 million, EBITDA of £31 million and earnings per share of 4.1 pence.

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This information is provided by RNS

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