Independent power producer Ipsa will spend $40-million (about R294,5-million) on the first 500 MW of generating capacity to fast track its Coega project, in the Eastern Cape, following a successful share placement.

On March 2, the South African Reserve Bank agreed to Ipsa listing of ten-million new shares on the JSE's AltX. The new shares represented 13,14% of the enlarged issued share capital.

CEO Peter Earl said the company was "very pleased" with the price of $80 a kW.

"This allows our Coega fast-track project to be highly competitive in terms of the installed cost a MW, which is the key ratio for every power developer. We would expect our total installed cost at Coega to be well below $250 000 a MW and that is a good price for what is a large plant."

Ipsa would pay the first tranche, of 25%, immediately upon entering into the agreement, while the second tranche, also 25%, would be paid on March 31 and the balance a year later. The initial two financing payments, totalling around $20-million, would be funded from existing cash reserves and short-term financing.

Coega is Ipsa's largest development project to date and is a proposed combined-cycle gas turbine project of 1 600 MW made up of two separate blocks of 800 MW each.

The company said that the new turbines would form the open cycle components of the initial 500 MW of the first block of the project and that the conversion of the two blocks to combined cycle was expected to take place at a later stage.

"By purchasing turbines ready for immediate delivery, we can considerably reduce the time it takes to have the first unit up and running. The acquisition of the first 500 MW of turbines for Coega not only reduces the time pressure on the construction timetable but also positively improves the economic factors influencing the returns on the project," Earl said.

The Coega project remained subject to the the necessary government regulatory approvals, planning and environmental consents being granted and to financing being completed, the company stated.