| Fri 28 Sep 2007, 11:00 | | IPSA - COEGA Fast Track Combined Cycle Gas Turbine |
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IPS
IPSA
IPSA - COEGA Fast Track Combined Cycle Gas Turbine And Other Power Plant
Progress
IPSA Group PLC
Incorporated and registered in England and Wales)
Registration number 5496202)
AIM Share Code: IPSA & ISIN: GB00B0CJ3F01
JSE Share Code: IPS & ISIN: GB00B0CJ3F01
(`IPSA` or `the Company`)
COEGA FAST TRACK COMBINED CYCLE GAS TURBINE 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
Liz Shaw, COO, 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
Julia Benadie, Hichens, Harrison (South Africa) Ltd +27 11 778 6470
Allan Piper, First City Financial 020 7436 7486
28 September 2007
Noble & Company Limited
AIM Nominated Advisor and Joint Broker to IPSA Group PLC
Standard Bank
AltX Sponsor to IPSA Group PLC
Date: 28/09/2007 11:00:03 Produced by the JSE SENS Department.
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