28th Sep 2007 10:00
IPSA Group PLC28 September 2007 28 September 2007 IPSA Group PLC ("IPSA" or "the Company") 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 importantsteps in the development of its portfolio of new power generation projects inthe Eastern Cape province of South Africa. In particular, it has made importantadvances on the 1,600 MW Coega Fast Track Combined Cycle Gas Turbine Project inPort Elizabeth ("the Coega Project"). IPSA has now reached agreement with TurboCare SpA ("TurboCare"), a subsidiary ofSiemens Power Generation, for the complete refurbishment and upgrade of the fourFiat Avio 501 D gas turbines (the "Turbines") acquired earlier in the year forCoega Project. Under the agreement with TurboCare, all four units are currentlybeing overhauled and zero-houred to as-new status. Additionally, TurboCare hascontracted to upgrade the Turbines from D technology to DU (F Class) technology.The primary effect of this upgrade - in addition to making the machines morefuel efficient - is to increase the aggregate nominal capacity of the fourTurbines by 4 per cent., from approximately 500 MW to 521 MW. The cost of the upgrade is approximately US $14 million. TurboCare has agreedto provide favourable extended payment terms to IPSA to allow the upgrade tooccur immediately without waiting for the Coega Project to achieve financialclose. The first of the Turbines is already undergoing engineering works inItaly. All four upgraded Turbines are expected to be ready for delivery to PortElizabeth in April 2008 and for installation thereafter. When installed at Coega, the upgraded Turbines will have the same performanceand life expectancy as a new turbine off the assembly line. However there aretwo significant benefits from the use by IPSA of "Grey Market" turbines. The first is an overall cost saving. IPSA seeks to have the lowest possiblecost per MW installed in order to make its electricity from its new, independentpower plants the most cost-competitive in South Africa. The second is the shortlead time to delivery. There is currently an average delay of between eighteenmonths and two years between ordering new turbines and their delivery from thefactory 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 forcommissioning prior to the World Cup in South Africa in 2010. This is animportant benefit, not only for IPSA but for South Africa as it faces continuingshortages of power generation capacity and long lead times to the commissioningof new coal fired power plants. The Board expects to announce the selection of an overall financial adviser tothe Coega Project by the end of October. This follows a competitive processinitiated in July. Separately, IPSA is now in negotiations to incorporate local Broad-Based BlackEconomic Empowerment ("BBBEE") investment funds as shareholders for both theElitheni Clean Coal Project ("Elitheni Clean Coal") and at the combined heat andpower ("CHP") project for da Gama Textiles. It is intended that the investmentin these projects will be at a premium to IPSA's book costs. Furtherannouncements on both of these projects will be made in due course. IPSA continues to negotiate the sale of a minority stake in its Newcastle CHPplant with a BBBEE qualifying fund. This follows the announcement in August2007 that IPSA had completed a capital increase with Metropolitan Life of SouthAfrica as part of its BBBEE deal with Imara Power, a BBBEE group. IPSA remainscommitted to demonstrating its BBBEE commitments at both the corporate and theproject level. Elitheni Clean Coal is an existing project under development where IPSA plans tobuild a mine-mouth coal-fired plant at Indwe to the north of Port Elizabeth andEast London. IPSA had originally intended to develop 400 MW of capacity on asite adjacent to the Guba coal reserves at Indwe. Following further investmentin recent months by the Strategic Natural Resources PLC, the owners of theElitheni coal mine, in proving up the coal deposits at the site, the IPSA Boardtook the decision that there was sufficient commercial availability of coal toincrease Elitheni Clean Coal from 400 MW to 500 MW based on two blocks of 250 MWeach. IPSA is now looking to secure options over turbines and boilers for thefirst 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 aswell as with our other two projects in the Eastern Cape. IPSA intends to bringits new capacity on stream as fast as possible to meet the desperate need forpower in South Africa.' For further information contact: Peter Earl, CEO, IPSA Group Plc 020 7793 5600Liz Shaw, COO, IPSA Group Plc 020 7793 5600John Llewellyn-Lloyd, Noble & Company Limited 020 7763 2200Sean Lunn, Hichens, Harrison (South Africa) Ltd +27 21 950 2711Julia Benadie, Hichens, Harrison (South Africa) Ltd +27 11 778 6470Allan Piper, First City Financial 020 7436 7486 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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