Ormat Acquires Stake in Guatemala Geothermal Project

An Ormat Technologies subsidiary signed an agreement to purchase approximately half partnership in Orzunil I de Electricidad, Limitada (Orzunil), which owns the Zunil Geothermal Project in Guatemala, thereby increasing its ownership in the Zunil Project to almost 72 percent. The purchase price agreed upon by the parties is USD$14,750,000.

“We are very happy to increase our ownership share in Orzunil which we initiated and developed more than 10 years ago, a period in which we did not have the ability to own our power plants,” said Dita Bronicki, CEO of Ormat Technologies. “We are now familiar with the electricity market in Guatemala, where we are now constructing the Amatitlan power plant which, when complete, will bring our generating capacity in Guatemala to 44 MW.” The Zunil Project is composed of one power plant that started operations in 1999 and has a generating capacity of 24 MW. The project is expected to generate approximately USD$12.5 million of revenue in 2006 on a full-year basis. Operation and maintenance services of the Zunil Project are provided by another Ormat subsidiary. The Project currently sells its generating capacity in accordance with a long-term power supply agreement with the Instituto Nacional de Electricidad Limitada (INDE), a national Guatemalan utility. The geothermal field providing the geothermal resource to the power plant is owned by INDE, but due to insufficient geothermal flow from the wells, it cannot presently support the full power plant generating capacity. Nevertheless, as provided in the power purchase agreement, INDE is paying for the full 24 MW of generating capacity, and is currently drilling two new geothermal wells, which, if successful, will bring the power plant output to the full 24 MW. Due to recent hurricane activity, some piping from the well to the power plant was damaged and as a result, the project has not been in operation since October 14, 2005. The power plant is expected to be in full operation in early 2006. The closing of the acquisition documentation is subject to the approval of the senior lenders, International Finance Corporation (IFC) and Commonwealth Development Corporation (CDC), and is expected to take place no later than the first quarter of 2006. The acquisition is expected to increase Ormat’s net income from the said project by $1.9 million in 2006 on a full-year basis. Ormat, whose products and systems are covered by more than 70 patents, currently has operations in the United States, Israel, the Philippines, Guatemala, Kenya, and Nicaragua, all focused on geothermal and recovered energy power.
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