Vallibel Power Erathna PLC, a Dhammika Perera company which is one of the largest privately owned hydro power generators in the country with an installed capacity of 9.9 MW, has better than doubled its after-tax profit in the year ended March 31, 2008 to Rs.346.4 million from Rs.152.8 million the previous year.

The company’s Chairman, Mr. Dhammika Perera, has told shareholders that the profit included the capital gain of Rs.135 million earned through the disposal of the company’s investment in Didul (Pvt) Limited.

He reported that during the year under review, Vallibel had generated 42.1 million KWH of energy resulting in a turnover of Rs.303.8 million, 10.8% above the previous year in generation terms and 34% in rupee terms.

Perera noted that the company had declared three interim dividends totaling 57 cents on its one-rupee share during the year under review and will at its AGM on September 23 consider a resolution to regard the third interim dividend of 30 cents per share paid on May 5, 2008 as a final dividend for the year ended March 31, 2008.

The company has since declared another dividend of 29 cents per share for the current financial year and this is due to be paid this month.

Analysts said that Perera who owns 24.67% of the company, whose top shareholder is Vallibel Power Limited with 51%, is negotiating with a foreign buyer to dispose of the controlling shares of Vallibel Power Erathna.

There has been market speculation on this pending deal (which has been publicly disclosed) for some time now but it has not yet been finalized and the Vallibel share has been trading at around Rs.1.60 XD on the CSE.

Perera said in the Vallibel report that in the current economic situation of ever increasing cost of thermal energy, small hydro projects could play a significant role in the economic development of the country.

"It is believed that there are yet untapped small hydro resources in the country that could be developed into power generation," he noted.

"However, because of various impediments, both at approval stages and at construction stages, these resources could not be tapped for the generation of hydro power."

He was hopeful that the newly formed Sri Lanka Sustainable Energy Authority was addressing various impediments associated with the development of such resources.

The company has entered into a standardized power purchase agreement with the CEB up to July 15, 2019 with the tariff paid by the CEB annually revised in January each year on an "avoided cost basis."

Perera said that Vallibel, like other small hydro power developers, did not have access to the manner in which the CEB computes these tariffs. They also did not have any remedy to challenge such computing.

"However, I am pleased to inform you that the tariffs for the year 2008 appear to be reflecting the true spirit of the pricing formula contained in the Standardized Power Purchase Agreement entered into between the Company and the CEB, and I hope that any future tariff revisions will also reflect the true spirit of the pricing formula," he said.

The Vallibel project at Erathna has an installed capacity of 9.9 MW. Construction of the project began in July 2002 and commercial operations commenced two years later reaching normal operational capacity in October of that year.

Located in the Kuruwita Divisional Secretariat area of the Ratnapura District, the run-of-the river plant utilizes the water flow of the upper reaches of the Kuru Ganga which originates from Adam’s Peak at an elevation of 2,100 metres above mean sea level.

Vallibel Power has a stated capital of Rs.1.17 billion, reserves of Rs.55.9 million and accumulated profits of Rs.245.1 million in its books.

Net assets per share had grown to Rs.1.97 during the year under review from Rs.1.83 the previous year and the share traded at a high of Rs.2.50 and a low of Rs.1.60 during the year. This compared to a trading range of Rs.8.25 to Rs.1.60 the previous year.

The directors of the company are: Messrs. Dhammika Perera (Chairman), L. Wickremarachchi (MD/CEO), .T.L. Fernando, P.K. Sumanasekera, W.D.N.H. Perera and S. Amarasekera.