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> September 19, 2005 |
New generation projects in South Africa and progress report on Newcastle project IPSA Group Plc (“IPSA” or “The Company”) is pleased to announce a number of important developments.
1) Coega, Port Elizabeth IPSA has signed preliminary agreements for the lease of a 20 hectare site at Coega Development Corporation’s Industrial Development Zone (“the IDZ”) at Port Elizabeth with the intention of developing a fast track combined cycle gas turbine (“CCGT”) project of 800 MW. This project would initially operate in open cycle at 500MW using liquid fuels pending construction of an LNG receiving terminal at the IDZ which Coega Development Corporation is planning as part of its infrastructure upgrade plans. The IDZ is an important element in South Africa’s policy of adding value to locally mined metals and minerals. A number of energy intensive metal-processing and smelting companies are moving onto the IDZ site subject to the availability of reliable, sustainable, regional generation of electric power. In recent weeks a series of severe unplanned power cuts in the Western Cape have made South Africa’s predicted shortages of electricity a subject of national political importance. IPSA has therefore chosen to accelerate its plans for new capacity in the southern coastal cities of South Africa to meet the need for new, fast track capacity. The Coega Fast Track Power Project (“Coega Fast Track”) is the most pressing of these generation projects. South Africa has only a limited number of port locations suitable for the import of LNG. To date, no LNG power projects have been developed in South Africa. However, IPSA believes that the LNG based CCGT experience gained in the 1990’s by its former parent, Independent Power Corporation PLC, in joint venture with Phillips Petroleum has given the company a strong basis for attempting to bring to financial close South Africa’s first successful LNG fired CCGT project. IPSA has therefore taken steps to secure a total of 500 MW of unused Siemens Westinghouse-designed gas turbines of 125 MW each at a favourable price. These turbines are available for immediate delivery. They were originally manufactured for a power project that was subsequently cancelled. In the view of the directors of IPSA, these turbines, if acquired by IPSA, would represent very good value for money. They also have the advantage that they can run on liquid fuels in open cycle pending conversion to CCGT operation once the planned LNG receiving terminal is completed out at Coega in around 2009/10. The total cost of the first phase of 500 MW is estimated at some US $150 million. The balance of conversion to CCGT would cost a further US $150 million. IPSA is in discussions with South African financial institutions for project financing the initial 500 MW of Coega Fast Track.
IPSA has this week signed a Memorandum of Understanding (“MOU”) for the development of up to 400 MW of mine-mouth clean coal power capacity at the Elitheni coal deposit in East London. Elitheni was one of the first coal deposits to be worked in South Africa prior to the opening up in the early 20th century of the Highveld coal reserves in the region close to Johannesburg. Elitheni is one of the few exploitable reserves in the Eastern Cape capable of supplying local coal-based power generation. Its development has the support of the local municipality, and the recent power cuts in the Western Cape have accelerated the pressure on Elitheni’s move to full production. Following recent zoning and environmental approvals, production is expected to commence within six months, subject to a series of independent coal reserve assessments intended to confirm historical reserve data. Under the terms
of the MOU, IPSA has been granted an exclusive right to act as power
developer for Elitheni. In return, IPSA has committed to assist Elitheni
in raising development finance for the coal reserve. IPSA will itself
advance £100,000 of its own funds in the form of a subordinated
loan to Elitheni which will be returned from the revenues of first commercial
coal production on the 9,000 hectare production site. IPSA has no further
responsibility for any additional funding at Elitheni but will be responsible
for its own environmental impact assessment on site together with project
engineering costs. The Board of IPSA believes that it has sufficient resources from its existing capital base to initiate its new programme of developments.
a) Newcastle
It should be noted
that the Newcastle project is of a kind never before undertaken between
the UK and the Republic of South Africa and has involved the dismantling
and re-construction of an entire CHP plant and combined cycle gas turbine
facility. b) Prospecton Basin, Durban. IPSA expects to make a formal proposal for up to 75MW of gas fired generation capacity to be located in the Prospecton Basin in Durban. The plant is expected to supply steam capacity to the oil refinery as well as use off-gas from the facility to complement gas purchases from Sasol. c) Simunye, Swaziland IPSA is continuing its discussions with the Swaziland Electricity Board in advance of negotiating the terms of a full project agreement with the controlling shareholders in the Royal Swazi Sugar processing facility in Simunye in Eastern Swaziland. This project is still expected to qualify for carbon credits through the United Nations Clean Development Mechanism under the Kyoto Protocol. 4) Johannesburg Stock Exchange and ALTEX The Board of IPSA has authorised the management of the Company to take all necessary steps to secure a secondary listing or share trading facility on either the Johannesburg Stock Exchange (“JSE”) or the JSE’s junior market ALTEX, the South African equivalent of London’s AIM. A further announcement will be made when IPSA decides which of these two markets to select for its South African share trading facility. For further information contact: Peter Earl, Chief
Executive 0207 793 7676 |
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