no thanks, says eskom

Robert Laing

Robert Laing

Instead of load shedding, Eskom could be buying power from private sector competitor, Independent Power Southern Africa. But the state-owned utility has refused to buy IPSA's power.

Since September, IPSA has been generating up to 18MW of electricity, enough to supply the suburbs Eskom switches off for two hours at a time.

The chief executive of IPSA, Peter Earl, said: "I haven't managed to get a satisfactory explanation from Eskom about this. Apparently, they say paying penalty clauses for load shedding is cheaper than buying from us."

IPSA's plant in Newcastle, KwaZulu-Natal, converts waste heat from two large chemical plants into electricity. It's Newcastle power station is technically South Africa's second privately-owned power station. The first was Kelvin, which the Johannesburg municipality sold to US energy group AES shortly before Enron's woes prompted AES to sell all of its assets. AES recently returned to South Africa as the sole bidder for two "peakers", power stations which only operate during peak demand.

IPSA declined to pitch for the bid because the design dictated by Eskom was uncompetitive, Earl said. IPSA is in the process of building a power station according to its own specification in Coega. This will start as a liquid fuel "peaker" and then later be converted into gas-powered generator which Earl believes can undercut Eskom's coal-fired generators.

The AltX-listed company's share leaped more than 20percent yesterday to R8 after it announced an alliance with CEF, a state-owned enterprise formerly called Central Energy Fund.

The CEF's PetroSA division will supply IPSA's Coega plant with liquid fuel, and then CEF's iGas division will supply it when it converts to gas.

The first phase of this project sees a turbine able to generate 512MW built at a cost of around R840million. Alcan's smelter, the anchor tenant of the Coega's industrial development zone, needs 500MW of guaranteed uninterruptible power, which IPSA will be able to supply. The cost of the second turbine will be more than R1billion.

IPSA owns the first turbine which it can bring into operation once the red tape involved in entering South Africa's electricity generation market has been cleared.

Once the plant has been converted from liquid to gas at a cost of an additional R1billion, it will be able to generate 1,6GW competitively. Eearl said this is scheduled for 2009, before Alcan needs 1GW for its full operation.