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Aug 21, 2012

Australian power firm mulls SA unit listing as it raises stake

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The decision by independent power company Wasabi Energy, which is listed in both Australia and London, to raise its shareholding in South African energy company AAP Carbon Holdings to 62.5%, from 25%, could be the precursor to an equity raising or listing of an independent power producer (IPP) in the coming 12 months.

Wasabi COO Diane Bettess tells Engineering News Online that the South African and sub-Saharan African markets, along with Turkey, are receiving priority attention from the company, which has projects in either operation or development involving more than 50 MW of new power capacity.

No value was attributed to the all-share acquisition of AAP Carbon, at its unveiling in mid-August. But the deal has increased Wasabi’s domestic capacity and enabled the two entities to consolidate their respective pipeline of projects.

These projects are located primarily within South Africa’s metals and minerals sector and are being pursued together with companies such as ArcelorMittal South Africa, Hernic Ferrochrome, Mogale Alloys and Tata Steel.

The consolidated portfolio also includes AAP Carbon’s flagship 20 MW power plant at International Ferro Metals, which is in the final stages of being registered under the Clean Development Mechanism of the Kyoto Protocol.

Bettess, who is a geologist by training and who has held various senior positions at Australian engineering and mining services companies, has joined AAP Carbon as an executive director – AAP Carbon’s Alex Berger is leading the enlarged entity.

She says the African unit, if a listing is sought, is likely to be dual listed in London and Johannesburg. But she stresses that the pace at which projects are advanced and market sentiment will dictate the timing.

“In order to build these plants, whether we do it through a debt/equity combination or through straight equity, we are going to require additional equity to build the business,” Bettess explains, adding that a listing would be among the options explored.

The domestic market for on-site chemical and thermal energy conversion, involving plants ranging in size from 5 MW to 30 MW, is considered to be material. It is being spurred by rising electricity prices and a desire by industrial companies to improve the energy efficiency of their operations.

AAP Carbon has developed particular expertise in configuring GE Jenbacher gas engines to capture off-gases to generate power. Wasabi, which is domiciled in Melbourne, Australia, is the proprietor of the Kalina Cycle – an efficient way of turning low- to mid-temperature heat to power. The Kalina Cycle can add a further 10% to 20% of capacity by capturing exhaust gases emerging during the power generation process.

There is a growing appetite in South Africa industry for the combination of chemical and thermal energy conversion and Bettess says she has found South African business people, as well as the regulatory authorities to be “strongly supportive” of such endeavours.

“We believe that there is going to be a strong pipeline of opportunities in the coming years,” she concludes.


 

Edited by: Creamer Media Reporter
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