Ormat Announces $43 Mil. Power Plant Deal With New Zealand

Ormat Industries (TASE:ORMT) announced Sunday the signature of a contract to plan, supply and establish a geothermal power plant in New Zealand.

The plant, worth some $42.8 million to the Israeli company, is supposed to supply 39 megawatts. Ormat noted that this would be the second power plant it is supplying to the same customer. The plant already constructed supplies 52 megawatts and has been operating for three years.

The Israeli company has also built several other New Zealand plants: In 1990 it built a plant at Kawerau, and then won a contract to build another at Ngawha in 1997. Additional projects were carried out at Mokai and Rotokawa. Ormat has also carried out projects in Costa Rica and Guatemala.

The new contract will only come into force when the customer obtains the necessary financing, Ormat qualified. That should happen by year-end.

Supplying the equipment and building the plant are expected to take 19 months from the date the contract comes into force, and to end in the third quarter of 2004, Ormat said.

In recent years Ormat changed strategy, from building and selling power plants (as it did for the previous New Zealand plant) to building and running them, and selling the electricity to local power companies, thus assuring itself of stable cash flow.

Initially the strategy change engendered heavy losses, but in the second quarter of 2002 Ormat posted a net profit of NIS 2.6 million, compared with losing NIS 15 million in the parallel quarter of last year.