IPSA Group PLC - Independent Power Producer in Southern Africa





> Introduction > Background > Experience > Investment Strategy > People > Corporate Governance > Constitutional Documents > Contact Details		Market Overview South Africa's GDP grew by 4.5 per cent. in 2006 and its current GDP (PPP) is US$ 576.4 billion. Approximately 32 per cent. of South Africans do not have access to electricity at home, while peak demand for electricity in South Africa is forecast to exceed existing power capacity by the end of 2006. The Government is committed to increasing access for the country to reliable and affordable electricity and the Minister of Public Enterprises for the Government announced in October 2004 that South Africa needs to boost its installed power generation capacity by 5,000 MW over the next five years. In response to the forecast supply shortfalls, Eskom has recently commenced a refurbishment programme aimed at bringing three mothballed coal-fired power stations into service with a total generating capacity of 3,800 MW. The Government recognises the need for competition and for a more rational use of resources. As a result, it is now Government policy that 30 per cent. of RSA’s power capacity should be in private ownership by 2010 and that at least 30 per cent. of all new capacity constructed over the next five years should be met by IPPs. In order to facilitate this, the Government has embarked on a programme of structural reform in the regulation of the power industry and announced on 11 April 2005 a tender for new power capacity with an in-service date by the end of 2008. Competitive Position The Directors believe that with the forecast shortfall in generating capacity in South Africa in the near future and the Government’s policy of privatisation, there will be further opportunities to develop power plants both in South Africa and in neighbouring countries (such as Botswana, Lesotho, Mozambique, Namibia and Swaziland) that have traditionally relied upon South African exports of electricity. The Directors further believe that the Group is well positioned to take advantage of these opportunities given the management’s experience in the power generation industry and the Group’s existing presence and contacts in South Africa.