Rurelec rises on Chilean power firm deal

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LONDON (ShareCast) - Latin America power generation company Rurelec rose strongly after it announced a deal to buy a 50 per cent stake in a Chilean firm.

The company has agreed terms with Independent Power Corporation (IPC (SES: E1:I12.SI - news) ) to acquire its interest in Central Illapa.

The Chilean project company is developing a 250 MW open cycle gas fired peaking plant in Mejillones, a key hub on the Chilean power grid.

Rurelec is acquiring the shares in Central Illapa for zero premium and refunding a portion of its third party project costs to date.

The news boosted shares 9.5% by 0900 on Wednesday.

Central Illapa has also been shortlisted by an international mining group in a tender to supply 500 MW of power to their operations in northern Chile.

If awarded the power purchase agreement, Rurelec said it would work with substantial industry partners to construct, own and operate this high efficiency liquefied natural gas fired combined cycle gas turbine plant.

Rurelec and IPC have also together been short-listed for a further 500 MW CCGT project to be constructed in northern Chile also to run on LNG with capacity to be contracted to another mining group, the firm said.

The PPA proposals are scheduled to be adjudicated in the second or third quarters of 2013.

Peter Earl, Chief Executive of Rurelec, said the group's decision to focus on Chile and Peru came at a time when both countries urgently need new generation capacity.

He noted that regional mining companies were looking for reliable and experienced partners to meet the energy needs of their operations.