South African power producer IPSA Group Plc (AIM: IPSA) said it has taken back ownership of Elitheni Clean Coal Holdings Ltd (ECCH) and has entered into an option agreement for the purchase of a site on which it intends to construct the first phase of its mine mouth power project in South Africa's Eastern Cape province.
In November 2007, IPSA announced the sale of a 50 percent stake in ECCH to Exodus Africa LLC for US$5 million. Following expiry of the agreed term and payment not being received, IPSA has exercised its rights and taken back ownership of the sale shares.
ECCH has entered into the option agreement to purchase the land which is adjacent to the Elitheni mine as well as abutting the railway line which runs from Indwe to East London. Work on the environmental impact assessment will begin in November 2009.
IPSA has identified potential suppliers of circulating fluidised bed boilers and turbines for the project. Funding for the equipment is expected to be provided under an export guarantee financing package.
IPSA intends to pursue the clean coal expansion at Indwe based on private power purchase agreements following the announcement by South Africa’s power group Eskom that it has put on hold its process for tendering Power Purchasing Agreements with independent power producers.
With power shortages now being anticipated once more in South Africa from the end of 2009, IPSA is looking to come to agreement with large power users. In total IPSA intends to develop up to 1,000 MW of clean coal power plant capacity throughout the Eastern Cape between East London and Port Elizabeth, it said.
IPSA is the owner/operator of South Africa's first independent power plant (IPP), the Newcastle Cogeneration gas-fired power plant in KwaZulu Natal. In a trading update at the end of September, IPSA said it has initiated discussions with a number of private sector parties regarding power offtake arrangements that would allow the Newcastle plant to restart operations.