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IPSA in talks with potential BEE partner over sale of NewCogen stake

Published: 07:29 20 Jul 2015 BST

gas-to-power_station,_chimney,_sized
Gas-to-power operations could be expanded if a deal is done

IPSA (LON:IPSA) told investors it is in talks to sell a portion of the Newcastle Cogeneration (NewCogen) power station in South Africa.

The talks are with a black economic empowerment (BEE) group and, if negotiations are successful, a partnership would enable an expansion of the Newcastle operation.

“Having a BEE partner would assist the board's plans to add additional capacity at Newcastle under the new gas-topower programme of the South African Government,” IPSA said.

The company added that it is satisfied with trading conditions at the NewCogen following an extension of power sales arrangement with South African utility Eskom, and the plant is operating well.

On a corporate level IPSA warned that working capital remains tight and it is being managed carefully.

IPSA continues to rely upon the receipt of funds from sister-company Rurelec (LON:RUR) which purchased power turbines from the group. The turbine cash is needed to settle up a number of outstanding debts.

It was confirmed today that Rurelect has made a payment, on IPSA’s behalf, to IPSA’s main creditor Ethos Energy. Subsequently, the amount owed to IPSA from the turbine sale now amounts to £2.91mln.

“The company is in discussion with Rurelec regarding the timing of the receipt of this balance although there is no clarity yet on the timing of it,” IPSA said.

Ethos Energy is also due a €2.6mln payment by September 30.

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