Aggreko switches Bangladesh plant to natural gas

Aggreko is to convert its 145 MW diesel temporary power plant in Ghorashal, Bangladesh into a natural gas plant. The change, agreed with client Bangladesh Power Development Board (BPDB), will extend the contract period to 2015 and increase its value by US$100 million.

The company also issued a positive trading update for the year to 31 December in which it said that revenues were likely to be 22% up year-on-year with trading profits expected to be up 25%.

The switch from imported diesel to locally produced gas at Ghorashal will reduce the overall cost of energy production from the plant by over 60%. The entire fleet of existing generators will be replaced with gas units, with the project to be completed in the second quarter of 2012.

The opportunity to change to natural gas came about as a result of the de-commissioning of an existing gas fuelled turbine located at the site.

When Ghorashal is converted to gas, Aggreko will have more than 650 MW of gas-fuelled power on rent worldwide.

In its trading update, meanwhile, Aggreko said revenues for the year are expected to be in the region of £1.4 billion, and profit before tax and amortisation is expected to be around £324 million (up 5%), which is slightly ahead of previous guidance.

Capital expenditure on fleet in 2011 is expected to be around £395 million, which is 2.3 times fleet depreciation, and will be approximately £320 million in 2012.

The international power project business continues to grow strongly, and the local business - mainly in Europe and North America - is likely to see strong year-on-year growth in the final three quarters of the year.

The company said it expected trading in the first half of 2012 to be strong, helped by revenues from the UK Olympics in London. "We are more cautious about the second half of 2012, when any downturn in economic activity is more likely to be felt by our businesses, and comparatives will be tougher."

The company will also benefit from changes to UK tax legislation, which exempts the profits of foreign branches of UK companies from UK corporation tax. This will reduce Aggreko's effective tax rate next year by around 3%. Its effective tax rate this year was 28.5%.

Rupert Soames, Aggreko's chief executive, said: "We have had a very successful year in 2011 and have grown our business significantly at the same time as returning capital to shareholders. As we enter 2012, demand for temporary power remains strong and we will continue to invest in the expansion of our fleet and our global network of service centres".