Power group Ipsa would acquire two high-efficiency Jenbacher 616 gas engines to provide its Newcastle Cogeneration (NewCogen) subsidiary with 3.8 MW of additional power capacity to sell to Eskom under an existing medium-term power purchase programme (MTPPP) contract.

The gas engines, which have a capacity of 2 MW each, would be acquired from Independent Power Corporation, a subsidiary of Rurelec, for £1.2-million.

The consideration would be satisfied as to the sum of £1-million by an offset of about $1.6-million against the debt of $6.5-million still owed by Rurelec to Ipsa, arising from the conditional agreement to dispose of two of Ipsa’s Siemens Westinghouse 701 DU gas turbines. 

The balance of £200 000 would be paid in cash when the engines enter into commercial operations at NewCogen’s site in March 2014.   

The installation of the Jenbacher gas engines, along with a 1.3 MW Deutz TBG 620 K gas engine that was bought in August, would enable NewCogen to generate at the full 14.3 MW capacity contracted under the MTPPP with Eskom. The plant was currently generating 10 MW.

“The new capacity, which will operate at a significantly higher efficiency than that of the current plant, will enable Ipsa to maximise the commercial potential of its existing MTPPP contract with Eskom.

“It will also allow us to supply greater capacity under whatever new power purchase agreement (PPA) arrangements are put in place when the current MTPPP programme comes to an end in 2015 and the Department of Energy’s replacement PPA programme comes into effect,” commented CEO Phil Metcalf.

MALAYSIA COURT BID
Meanwhile, Ipsa on Friday also announced that Iris Ecopower, the Malaysian company with which it had entered into a contract to sell two of its Siemens Westinghouse turbines in October 2012, had issued a claim against Ipsa in the Malaysian courts for the recovery of $3.1-million paid as a deposit, plus costs and consequential losses, amounting to about $9.8-million in total.

Ipsa announced in October last year that it would sell the two remaining Siemens Westinghouse 701 DU turbines, which it initially acquired for a power project at Coega, for $31-million.

However, the power generation company on Friday said Iris failed to pay it the balance of the purchase price, despite having been granted time extensions. The Malaysian company, therefore, forfeited the $1.3-million deposit in terms of the contract signed by the two parties.

“Based on legal advice previously obtained, the board of Ipsa considers the claim to be entirely without merit. The board is taking further legal advice on this matter,” the company said in a statement.