Polaris Infrastrucure reports changes to PPA for San Jacinto geothermal plant in Nicaragua
Polaris Infrastructure adapts and extends power purchase agreement for its San Jacinto geothermal power plant in Nicaragua for an additional 10 years to 2039, lower price and option to extend capacity by 10 MW.
Polaris Infrastructure Inc. reports board approval of revised terms to its Power Purchase Agreement at its San Jacinto geothermal facility in Nicaragua by its wholly-owned subsidiary Polaris Energy Nicaragua, S.A. (“PENSA”).
After extensive discussions with the Ministry of Energy and Mines in Nicaragua, the Company is proud to announce the following as it relates to the continuing commitment to provide renewable, clean, baseload power to the country of Nicaragua at long-term competitive rates:
- The term of the PPA has been extended for an additional 10 years to January 2039.
- A non-indexed $110.00 USD per Mwhr price versus the current $130.712 USD per Mwhr price in 2020.
- Contractual confirmation for Polaris Infrastructure to include a Binary Unit of up to 10MW’s.
- An extension of two years to the income tax holiday such that income taxes will now be payable in 2025 versus 2023.
- The previous price penalty clause requiring a minimum power production delivered has been eliminated.
- The amended terms are to take effect immediately.
The amended PPA has been signed by both parties and has received consent from all project lenders and the board of directors. The concession agreement and generation license will be amended to incorporate such changes, which we expect to be completed in January.
The desire to construct the binary unit at the San Jacinto facility, combined with the 2029 expiration of our existing PPA, provided the context to renegotiate the terms of the existing contract. The Company believes the aforementioned parameters of this revised PPA will allow for significant realization of free cash flow over an extended period of time. The Company is confident that the combination of the extended term, increased tax holiday, long-life of the asset and the addition of the binary unit will provide the opportunity to refinance the existing project loan on terms that are favourable to shareholders.
The Company reiterates its continued commitment to its current dividend policy for the foreseeable future.
“The revised terms of the PPA enable Polaris to provide a competitive source of baseload, renewable energy to the Nicaraguan market. The combination of the long-life nature of our asset and the ability to grow the production provides a win-win for both parties,” commented Marc Murnaghan, CEO of Polaris Infrastructure. “In my opinion, such new terms and the fact that our Company now has an average remaining life of over 18 years on all its PPAs should be viewed positively by market participants.”
Source: Company release via Newswire