Press Releases

Revised Customer Pricing

16 Jan 2014

Back to List

16 January 2014

GREKA ENGINEERING & TECHNOLOGY LTD

("Greka Engineering" or "the Company")

Increase in gas processing and electricity prices charged to customers

Greka Engineering & Technology Ltd. (AIM: GEL), the engineering, procurement, construction and management (EPCM) Company which owns and operates infrastructure assets in China, announces that the Company has agreed revised gas processing and electricity prices with Green Dragon Gas Ltd. (AIM: GDG).

With effect from 1 January 2014, the prices of both PNG and CNG processing are US$1.625/Mcf (RMB 0.35 per cubic meter) for the first 3,530 Mcf (100,000 cubic meters) of gas processed per day, reducing on a sliding scale to US$0.14/Mcf (RMB 0.03 per cubic meter) for the volumes above 17,700 Mcf per day (500,000 cubic meters). With effect from the same date, the electricity price increases to US$0.197 per kilowatt-hour (RMB 1.2 per kilowatt-hour) for the first 30,000 kilowatt-hour consumed per day, reducing on a sliding scale to US$0.008 per kilowatt-hour (RMB 0.05 per kilowatt-hour) for the volume above 150,000 kilowatt-hour.

Previously, the prices charged by the Company for piped natural gas (PNG) and compressed natural gas (CNG) processing were US$0.37/Mcf (RMB 0.08 per cubic meter) and US$0.84/Mcf (RMB 0.18 per cubic meter) respectively, and the electricity price was US$0.105 per kilowatt-hour (RMB 0.64 per kilowatt-hour).

In Q3 2013, the Company processed average daily volumes of 1,864 Mcf (52,792 cubic meters) of PNG and 1,070 Mcf (30,305 cubic meters) of CNG, and supplied Green Dragon Gas Ltd. with an average of 20,759 kilowatt-hours per day.

Under the new contract, at 17,700 Mcf per day (500,000 cubic meters) processed and under the assumption of an equal split between PNG and CNG, the weighted average price would increase from US$0.60/Mcf (RMB 0.13 per cubic meter) to US$0.715/Mcf (RMB 0.154 per cubic meter), a 18.5% increase.

Randeep S. Grewal, Executive Chairman of Greka Engineering, commented:

"This pricing structure is designed to enable Greka Engineering to cover processing costs at lower levels of activity whilst incentivising both customer and processor to maximise volumes thereby increasing margins to the mutual benefit of both companies. Our strategy is to replicate this type of contract with other customers, allowing the customer to simply concentrate on developing and selling the resource."

For more information of Greka Engineering, please visit the company website at www.grekaengineering.com.

Contacts:

Greka Engineering

Randeep Grewal

+852 3710 0168

Smith & Williamson

Nominated Adviser

Dr Azhic Basirov / David Jones / Ben Jeynes

+44 20 7131 4000

RFC Ambrian

Broker

Sarah Wharry

+44 20 3440 6800

WH Ireland

Broker

Tim Feather

+44 113 394 6600

Walbrook

Media & Investor Relations

Paul McManus / Guy McDougall

+ 44 20 7933 8780

get@walbrookpr.com

 

About Greka Engineering & Technology

Greka Engineering & Technology Ltd., (AIM; GEL) demerged from Green Dragon Gas (AIM; GDG) via a dividend in specie in September 2013 on AIM.

Greka Engineering offers turnkey solutions to over 90 upstream, midstream and downstream gas suppliers. The Company's technologies include Compressed Natural Gas/Liquefied Natural Gas (CNG/NLG) compressor equipment, CNG retail dispenser equipment and CBM wellhead extraction technologies. The company also supplies proprietary Integrated Circuit Card Point of Sale (ICC POS) and Supervisory Control and Data Acquisition (SCADA) software and hardware solutions for the remote management of transmission systems, power facilities, vehicle management and retail services.

To date, the Company has completed several Engineering, Procurement, Construction and Management (EPCM) contracts including the design, construction and management of gas gathering systems, a gas pipeline in Shanxi Province to the China West-East pipeline, the installation and commissioning of a 10MW gas-fired power facility in the Shanxi province and the construction of CNG retail stations.

Going forward, the Company's stated business model is to invest, operate and maintain wholly owned assets for its customers in return for service contracts based on the volume management. This Intellectual Property (IP) led business model, combined with high levels of recurring revenue, is expected to generate greater returns for shareholders than the historical EPCM projects completed to date.