Project company Orad Ltd. (TASE: ORAD) today announced it had signed a NIS 100 million contract to build four photovoltaic solar energy production plants in the Negev with an aggregate capacity of 35.5 megawatts. Orad is planning to finance the work from equity and credit from banks. Infrastructure group Shikun & Binui Holdings Ltd. (TASE: SKBN), controlled by Shari Arison, which won a tender published by the Public Utilities Authority (electricity), is commissioning the project.
The agreement states that in addition to constructing the plants, Orad subsidiary Solarpower will operate and maintain them for 10 years (with exit points every three years) for a total of NIS 20 million. Solarpower designs, builds, and maintains photovoltaic solar electricity production systems. Orad's share price responded to the announcement with a 3.5% jump, pushing its market cap up to NIS 155 million.
IEC pressure on Shikun & Binui
Shikun & Binui is an important renewable energy player in Israel. The company expanded this activity this year by completing the financing for its 120-megawatt solar power project in Tze'elim, winning a Public Utilities Authority (electricity) tender for projects totaling 64 megawatts, and obtaining a conditional license for a 186-megawatt natural gas power station at Ashdod Port.
Under the current contract, Orad will perform "civil engineering work on the sites, construct a solar energy field, connect points to Israel Electric Corporation (IEC) (TASE: ELEC.B22) with electrical cables, and provide security systems for the fields in accordance with the regulator's demands." Orad said that it had committed itself to completing the work by the end of 2018, that the performance period would continue according to milestones set by the parties, and that 27.5% of the proceeds received for each of the sites would be paid on the date on which the site is connected to IEC. Orad added, "Since Shikun & Binui is subject to 'inflexible' timetables imposed by IEC for connecting the sites to the electrical grid, the agreements stipulate a substantial rate of compensation that Orad will have to pay if it does not meet the performance targets set in the agreements and on the dates stipulated in them. At the same time, Orad believes that the likelihood that it will not succeed in meeting the performance targets by the deadlines set forth in the agreements is very low."
Orad is a provider of integration services, and provides security, safety, control and communications, and solar energy solutions, mainly in Israel, but also overseas.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 9, 2017
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