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> September 19, 2005 |
Coega Fast Track Combined Cycle Gas Turbine Project and Other Power Plant Progress IPSA is pleased to announce that it has recently taken a number of important steps in the development of its portfolio of new power generation projects in the Eastern Cape province of South Africa. In particular, it has made important advances on the 1,600 MW Coega Fast Track Combined Cycle Gas Turbine Project in Port Elizabeth ("the Coega Project"). IPSA has now reached agreement with TurboCare SpA ("TurboCare"), a subsidiary of Siemens Power Generation, for the complete refurbishment and upgrade of the four Fiat Avio 501 D gas turbines (the "Turbines") acquired earlier in the year for Coega Project. Under the agreement with TurboCare, all four units are currently being overhauled and zero-houred to as-new status. Additionally, TurboCare has contracted to upgrade the Turbines from D technology to DU (F Class) technology. The primary effect of this upgrade - in addition to making the machines more fuel efficient - is to increase the aggregate nominal capacity of the four Turbines by 4 per cent., from approximately 500 MW to 521 MW. The cost of the upgrade is approximately US $14 million. TurboCare has agreed to provide favourable extended payment terms to IPSA to allow the upgrade to occur immediately without waiting for the Coega Project to achieve financial close. The first of the Turbines is already undergoing engineering works in Italy. All four upgraded Turbines are expected to be ready for delivery to Port Elizabeth in April 2008 and for installation thereafter. When installed at Coega, the upgraded Turbines will have the same performance and life expectancy as a new turbine off the assembly line. However there are two significant benefits from the use by IPSA of "Grey Market" turbines. The first is an overall cost saving. IPSA seeks to have the lowest possible cost per MW installed in order to make its electricity from its new, independent power plants the most cost-competitive in South Africa. The second is the short lead time to delivery. There is currently an average delay of between eighteen months and two years between ordering new turbines and their delivery from the factory as a result of high global demand for new power generation equipment. IPSA's Turbines will allow the first phase of the Coega Project to go ahead for commissioning prior to the World Cup in South Africa in 2010. This is an important benefit, not only for IPSA but for South Africa as it faces continuing shortages of power generation capacity and long lead times to the commissioning of new coal fired power plants. The Board expects to announce the selection of an overall financial adviser to the Coega Project by the end of October. This follows a competitive process initiated in July. Separately, IPSA is now in negotiations to incorporate local Broad-Based Black Economic Empowerment ("BBBEE") investment funds as shareholders for both the Elitheni Clean Coal Project ("Elitheni Clean Coal") and at the combined heat and power ("CHP") project for da Gama Textiles. It is intended that the investment in these projects will be at a premium to IPSA's book costs. Further announcements on both of these projects will be made in due course. IPSA continues to negotiate the sale of a minority stake in its Newcastle CHP plant with a BBBEE qualifying fund. This follows the announcement in August 2007 that IPSA had completed a capital increase with Metropolitan Life of South Africa as part of its BBBEE deal with Imara Power, a BBBEE group. IPSA remains committed to demonstrating its BBBEE commitments at both the corporate and the project level. Elitheni Clean Coal is an existing project under development where IPSA plans to build a mine-mouth coal-fired plant at Indwe to the north of Port Elizabeth and East London. IPSA had originally intended to develop 400 MW of capacity on a site adjacent to the Guba coal reserves at Indwe. Following further investment in recent months by the Strategic Natural Resources PLC, the owners of the Elitheni coal mine, in proving up the coal deposits at the site, the IPSA Board took the decision that there was sufficient commercial availability of coal to increase Elitheni Clean Coal from 400 MW to 500 MW based on two blocks of 250 MW each. IPSA is now looking to secure options over turbines and boilers for the first 250 MW of capacity at Elitheni Clean Coal. Peter Earl, CEO of the Company, said: 'We are very pleased to be making such good progress with our Coega project as well as with our other two projects in the Eastern Cape. IPSA intends to bring its new capacity on stream as fast as possible to meet the desperate need for power in South Africa.' For further information contact: Peter Earl, CEO, IPSA Group Plc 020 7793 5600 John Llewellyn-Lloyd, Noble & Company Limited 020 7763 2200 Sean Lunn, Hichens, Harrison (South Africa) Ltd +27 21 950 2711
Allan Piper, First City Financial 020 7436 7486 |
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