Integrated alternative energy business Renergen impaired its R12.2-million Côte d’Ivoire Hydro hydroelectric project, which was managed by its subsidiary, Mega Power Renewables, during the 2018 financial year and shifted its focus to the South African natural gas market.
The impairment decision was taken after studies revealed that the electricity tariff required to deliver reasonable investment returns from the hydroelectricity project to Renergen were above the norm, and that the company would benefit more from deploying that investment to developing Tetra4’s Evander gasfield, as well as bringing a second operation online.
Renergen posted a loss of R40.6-million for the financial year ended February 28.
During the year under review, it invested R9.6-million on plant, machinery and equipment for subsidiary Tetra4’s Virginia operating plant expansion in the Free State. A further R2.8-million was spent on a financial business system, as well as integrated health, safety and environmental quality software system.
The group has exploration rights over land in Evander, Mpumalanga, and in Virginia, in the Free State.
MHA Petroleum Consultants released a report on Renergen’s Tetra4 gas reserves, which indicated that Tetra4’s total proven and probable gas reserves are valued at about R8.4-billion, compared with R6.6-billion in the prior year.
The increase is attributable to a more favourable oil price, a more formal evaluation of the helium reserves and changes in the rand/dollar exchange rate.
Helium reserve volumes are estimated to be 6.21-billion cubic feet on a discovered commercial basis, or 3P. The contingent resources, or 3C, amount to 24.6-billion cubic feet.
These reserve estimates are based on assumptions including a rand/dollar exchange rate of 12 and a gas sales price of R227/GJ.
Renergen and Anheuser-Busch InBev, last month, through their respective subsidiaries Tetra4 and South African Breweries (SAB), also concluded offtake agreements for the provision of natural gas by Tetra4 to SAB for use in its delivery trucks.
This will help SAB reduce its carbon footprint by substituting clean liquified natural gas (LNG) for diesel and will also help it reduce its cost of operation on the fleet side.
“This agreement with SAB marks the second large-scale South African trucking operation to use new age fuels. The use of LNG not only drastically reduces carbon emissions but has the added advantage of improving the vehicle’s lifecycle maintenance and reduces the operator’s costs significantly,” Renergen CEO Stefano Marani explained in the company’s financial statements on Friday.