[miningmx.com] — THE way forward for the private power sector in South Africa continued to remain unclear, according to Richard Linnell, chairperson of London and JSE listed power generation group Ipsa.
Commenting on Ipsa’s results for the 12 months to end-September, Linnell highlighted continuing delays to power projects called for by Eskom as far back as 2008.
He commented, “a tender for base load power plants was announced by Eskom in 2008 and Ipsa was pre-qualified for the process.
“In addition, in April 2010, Ipsa pre-qualified for a proposed development at the Coega development zone. However, little progress has been made on either project.
“As a result of the delays in defining the base load programme, Ipsa terminated the coal contract for the proposed plant at Indwe in October 2010.”
Ipsa’s cogeneration plant at Newcastle (NewCogen) finally commenced generating power in March after extensive bureaucratic delays caused by Eskom and the South African government which have put the company under severe financial stress.
Linnell commented, “in spite of the revenues which will arise from the recommencement of electricity sales and the continuing very strict cost containment measures, the group’s working capital will continue to remain extremely tight until the company is able to realise cash from the sale of the turbines or secure external funding for the operations in South Africa.”
Ipsa was amongst the first independent power producers (IPP) to respond to South Africa’s power crisis and brought NewCogen into operation in October 2007.
It was subsequently forced to shut the plant down in September 2008 because of the delays in getting Eskom to sign a power purchase agreement which was eventually only put in place in August 2010.
Between September 2008 and March this year the Newcastle plant only operated between June 22 and August 31 2010 when Eskom agreed to a short-term supply contract over the period of the Fifa Soccer World Cup.
Ipsa is now also involved in legal action with Sasol over the gas supply contract for the NewCogen plant which Linnell said was likely to go to arbitration later this year.
“This has not been an easy time for the directors or the staff and stakeholders of NewCogen,” Linnell said.
Ipsa made an operating loss of ₤2.1m for the 12 months to end-September (previous comparable period – ₤2.2m operating loss) and reported a net loss of ₤1.2m (₤2.2m).
