Monday, Consolidated Water Co. Ltd. (CWCO), a company that develops and operates seawater desalination plant and water distribution system, said its affiliate Ocean Conversion (BVI) Ltd and the British Virgin Islands Government have signed a tentative seven-year binding term sheet, with a seven-year extension option exercisable by the British Virgin Islands Government.
As per the terms of the agreement, British Virgin Islands, or BVI, Government will purchase up to 600 thousands US gallons of water per day from Ocean Conversion seawater desalination plant located at Bar Bay in British Virgin Islands. The parties intend the agreement to govern the terms of sale of water until they execute a definitive contract.
However, BVI Government is not obliged to purchase any minimum volumes of water until the completion of the construction of the first phase of certain additional facilities at its Bar Bay plant, the company said.
The first phase construction involves installation of water pipes from the plant to the BVI Government owned reservoir site, and the piped water distribution system in 6-month period of signing the proposed definitive contract. After which, Ocean Conversion is to complete the second phase of storage reservoir construction on the BVI Government site within 12 months of the signing of the proposed contract.
Rick McTaggart, Chief Executive Officer of Consolidated Water said, "We believe this plant will contribute greatly to improving the quality of life for residents on the eastern end of Tortola, where water has historically been quite scarce."
Consolidated Water, which owns 43.5% equity interest in Ocean Conversion, said it does not expect revenues from the Bar Bay plant until the required construction work is completed. Further, it added that the Bar Bay plant agreement is unrelated to the status of Ocean Conversion dispute with the BVI Government over the ownership of the Baughers Bay plant.
CWCO is down $0.38, trading at $13.55 on the Nasdaq.
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