As announced in December 2011, Rurelec acquired a 50% interest in Cascade Hydro Limited, a newly formed hydroelectric power development company focused on run-of-river projects. In addition to its existing 4MW Canchayllo project, Cascade has now agreed to acquire the 255MW Santa Rita run-of-river hydro development project for US$10M, plus an additional payment, capped at US$5M in the event that certain performance targets are reached. The bulk of the consideration is payable when the project reaches financial close, which is expected to take place within six months from securing a power purchase agreement. Cascade expects there to be a new round of PPA tenders towards the end of this year.
With a planned construction period of about 42 months post financing, the US$600m project is not expected to enter commercial operations until 2017. The Board of Rurelec will review its funding commitment to Cascade on a regular basis. Cascade is planning a capital increase in order to fund the further development expenditure required to take the projects through to financial close. Rurelec's interest in Cascade is likely to be diluted via such capital increases.
Commenting on the expansion, Peter Earl, Chief Executive of Rurelec said: "I am delighted to announce further expansion in Peru, which has a well-developed and investor-friendly electricity sector. Santa Rita is a large and long term development project for Cascade and we look forward to playing an active role in its development."
