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Sri Lanka's Mackwoods Energy plans hydro plants of 6.4MW
13 Mar, 2012 06:59:35
Mar 13, 2012 (LBO) - Mackwoods Energy Limited, a unit of Sri Lanka's privately held Mackwoods group is is raising 350 million rupees from a public offer to build hydro power plants and expand existing business, officials said.
The firm is offering 25 million shares at 14 rupees and it will have 100 million shares after the initial public offer.

Nirmalie Samaratunga, co-chairperson of the 170 years old business group said the group employed over 8,000 people and was in agri-business, plantations, information technology, financial services, leisure and real estate.

"The IPO will enable the company to diversify its present operations and expand its activities in the renewable energy sector," she said.

In the six months to September 2011, the firm has reported profits of 41.02 million rupees on revenues of 131 million rupees in its prospectus.

Nilendra Weerasinghe, from NDB Investment Bank, advisors to the issue said the firm made 63 million rupees in the 10 months to January 2011.

The bulk of its revenues now come from the sale of diesel engines and generators.

But it is planning to build five mini-hydro plants at a cost of 1,140 million rupees, whose revenues are expected to flow from around 2014, Dharshan Perera chief executive of NDB Investment Bank said.

The firm will sell energy through a flat-tariff power purchase agreement to state-run Ceylon Electricity Board. The expected tariff is 14.58 rupees per kilowatt.

Mackwoods Energy will expand four existing hydro plants which are now being used to run factories at Agalawatte Plantations Plc, a group company.

In Wedamulla in Nuwara Eliya, it will upgrade a 200 kiloWatt plant to 1.4MegaWatts at a planned cost of 269 million rupees. It is expected to have enough water to operate 41 percent of the time in a year (plant factor) and generate 4.809 GigaWatt hours of energy.

In Labookelle, the firm plans to upgrade a 100 kilowatt generator to 1.3 MegaWatts at a planned cost of 246 million rupees. It will have a plant factor of 40 percent and will generate 4.343GigaWatts of energy a year.

In Frotof, also in Nuwara Eliya, Mackwoods Energy will upgrade a 60kiloWatt plant to 900kiloWatts at a cost of 167 million rupees. It is expected to have a plant factor of 40 percent and generate 2.999 GigaWatt hours of energy.

In Culloden in Kalutara the firm plants to upgrade a 60kiloWatt generator 200kiloWatts at a cost of 21 million rupees. It will have a plant factor of 41 percent and generate 0.517Gigawatt hours of energy a year.

In Doloswala in Ratnapura, the firm plants a 2.4MegaWatt hydro plant at a cost of 436 million rupees. It is expected to have a plant factor of 43 percent and generated 8.806GigaWatt hours of energy.

Though plant factor is estimated from past hydrological data, droughts could lower output.

The firm says it will use debt and 175 million rupees of cash from the initial public offer to build the plants.

Update II

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1. Niro Mar 13
At a guaranteed Rs 14.88 per KW, no wonder the many companies jumping into the 'mini-hydro' bandwagon.

Electricity pricing should be made competitive so the average pries are kept low. Those who produce it the cheapest will sell the most.

Rather than trying to be environmentally friendly (just like India and China) we should generate the bulk of electricity using coal: a relatively cheap and abundant commodity. This will help the economy to grow and keep the CEB solvent in the long run without burdening the taxpayer.

High guaranteed electricity prices for a mini hydros is a serious drag on the economic future of the country benefiting a small group of people at the expense of the masses.