China Hydroelectric reports record quarter

BEIJING 6/18/12 (PennWell) — Hydropower owner and developer China Hydroelectric Corporation announces record profits through the first quarter of 2012.

Even in a period usually projected as a net loss due to China’s seasonal precipitation patterns, the corporation was able to post banner numbers.

“In light of the challenges that China Hydroelectric faced in fiscal 2011, I am gratified to report several positive developments so far in fiscal 2012,” says Chief Executive Officer John D. Kuhns. Kuhn said above-average rainfalls in China’s eastern provinces — particularly Fujian and Zhejiang — produced record consolidated net revenue, gross profit, operating income and earnings before interest, taxes, deprecation and amortization (EBITDA).

Numbers provided by the company show China Hydroelectric’s consolidated revenue of UUS22.5 million is a 105% year-over-year increase, while the company’s adjusted EBITDA increased 202% to $16.9 million.

“This is in stark contrast to our financial results for the first quarter of 2011 when precipitation in all four provinces where we have power projects fell well below historical average levels,” Kuhns says.

Still, Kuhns says favorable tariff increases at some of China Hydroelectric’s facilities should impact the company’s future revenues. “The prices that the grids pay us for the electric power we generate have increased for six of our 26 power projects, which represent 21.5% of our total installed capacity,” Kuhns says. “The positive effect of these six tariff increases, which range from 5.8% to 17.0%, equates to an increase in estimated net revenue and operating income in excess of $1 million annually at average precipitation levels.

“While we cannot predict when tariffs might be increased for our other power projects, or the magnitude thereof, we remain hopeful that we will see additional tariff increases.” reported in February that China Hydroelectric had entered into an agreement with the Fujian Dachuang Group, which purchased the16-MW Yuanping hydropower plant for $22 million.

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China Hydroelectric, China Guangdong Nuclear Energy Development Company to jointly develop and construct Wuyue pumped-storage hydro project

China Hydroelectric Corp., an owner, developer and operator of small hydropower projects in China, has signed a framework agreement with China Guangdong Nuclear Energy Development Co. for the equity transfer of a controlling interest of the Wuyue Pumped-Storage Power Generation Co. Ltd.

China Hydroelectric currently holds a 79 percent equity interest in Wuyue Company, which owns the right to develop a 1,000-MW pumped-storage hydroelectric power project in Xinyang, Henan Province, China.

Under the framework agreement, subject to the completion of definitive documents, completion of due diligence and receipt of required governmental and other approvals in the PRC, China Hydroelectric will transfer a 51 percent equity interest in Wuyue Co. to Guangdong Nuclear, in exchange for which Guangdong Nuclear will agree to fund its proportionate share of the ongoing development costs of the project.

The terms contained in the framework agreement, which may be terminated by either party prior to the execution of definitive agreements, will be spelled out in definitive agreements that the parties expect to be completed by the first quarter of 2011.

The Wuyue project is located in Xinyang, Henan Province and will be used to supply renewable peaking power capacity to Guangshan County.

China Hydroelectric purchased a 79 percent equity interest in the Wuyue pumped-storage hydroelectric project and established the Wuyue Pumped Storage Power Generation Co. on June 11, 2009 for $24.4 million with the intention of pursuing the development of the project with a strategic partner.

Since the acquisition, CHC has spent about $5 million for the development phase. The construction timeline would span about six years once ground breaking occurs.

Recently, China announced it plans to boost its installed hydroelectric power capacity to 300 million kW by 2015 from the current 200 million in an effort to cut carbon dioxide emissions.

Government officials told media outlets that such an expansion is needed for China’s goal to reduce its carbon dioxide emissions per unit of gross domestic product (GDP) by 40 to 45 percent by 2020.

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