Pelktec Company Ltd signs framework agreement with Absolicon to acquire Production line in Ghana

Pelktec Company Ltd has signed a framework agreement with Absolicon for the acquisition of a production line for the T160 Solar collector in Ghana. Pelktec runs development projects in energy, water, environment and waste management in Ghana. The total sales value covered by the agreement is estimated at € 4-5 million plus a monthly license fee of 4% and sales of components. The framework agreement prescribes the principles for the separate agreements to be drawn up.

Content of the framework agreement

The framework agreement describes the separate agreements to be drawn up in the process. Absolicon’s proceeds from the sale can be grouped into three groups: acquisition of the line, license revenue and revenue from material sales.

1. Sale of the production line

The production line is of the same model as Absolicon has in Sweden and which the company has already delivered to Sichuan Province. The line with two six-axis robots has the capacity to produce 50 MW solar collectors (100,000 m2) per year. Together with the hardware, Absolicon provides consulting support for marketing and technical support, development and technical training.

The total value of hardware and activities covered by the agreement is estimated at € 4-5 million.

2. License to manufacture T160

For the right to manufacture T160 under Absolicon’s intellectual property protection, take part in future product development and use Absolicon’s trademark, a monthly license fee of approximately 4% applies to the sales value.

The production line in full production produces on a shift 50 MW solar collector (100 000 m2) per year with sales value € 20-25 million which with 4% license fee would mean about € 800 000 per year in license revenue. Absolicon’s estimate, however, is that it takes time for Pelktec to develop the solar thermal market for industries in the region so that these volumes can be achieved.

3. Material supply

Through the agreement, Absolicon ensures access to patented components and high-quality inputs partly manufactured in Ghana or locally at the installation site.

At full production, the production line needs to buy materials for € 10-15 million per year where 20% – 30% of purchases may go through Absolicon and 70% – 80% from local subcontractors. The outcome for Absolicon depends to some extent on the result of Absolicon’s ongoing material investment.

The framework agreement sets out overarching principles

The framework agreement prescribes the general principles for the separate agreements to be drawn up, and the steps to be taken before a binding agreement for the acquisition of the production line can be signed. The estimated value of sales is subject to change as well as the definitive design of the production capacity of the production line. Absolicon estimates today that the sales value of the agreement is at the lower end of the range of € 4-5 million.

If Pelktec fails to meet its commitments at every stage, they lose the right to complete the acquisition and then have the opportunity to recover part of the purchase price, but never for Absolicon’s incurred costs.

Market potential

The potential market in Ghana, for a production line producing Absolicon’s T160 solar collector, amounts to 4.2 million square meters, equivalent to 770,000 solar collectors or 7662 GWh, which would reduce the country’s CO₂ emissions from industry by 68% when oil is replaced as fuel.

Through investments in clean energy technology, Pelktec Company are developing and promoting the spread of ecofriendly projects equipped with advanced technologies, within energy conservation, efficiency and also to enhance water sufficiency, sanitation management and environmental protection.

Absolicon and Pelktec have today signed a framework agreement for the acquisition of a production line for establishment in Ghana to provide the region with advanced solar collectors.

The largest market segments for Absolicon’s solar collector technology in the region are:

• Foodprocessing

• Beverage industry

• Chemical Industry

Next steps

In this case, negotiations for the signing of the framework agreement have been fast and cooperation is still at an early stage. Discussions have just begun on the first pilot installations of the T160 in Ghana. More detailed contract writing is now taking place. Payment is made step by step in the same way as in the previous sale of the production line to the province of Sichuan.