Nedbank, Investec mull Kelvin power station disposal
Nedbank and Investec Bank are considering selling the 600 MW privately owned coal-fired Kelvin power station, in Kempton Park.
The power station formed a crucial part of the City of Johannesburg metropolitan municipality’s power supply and historically supplied between 10% and 14% of the city’s electricity requirements. Power is supplied to the city under a 20-year power purchase agreement (PPA) that was signed in 2001.
The power plant comprised two stations – Kelvin A and Kelvin B – with a combined nameplate capacity of 600 MW; however, given that it was an ageing plant, its capacity had degraded over time.
Nevertheless, the plant owners had recently undertaken an intensive maintenance programme to improve electricity generation.
Nedbank and Investec control Kelvin Holdings, which, in turn, owned the power station.
The banks believed that buying the power station would offer potential investors an opportunity to acquire “an operation on an established site at a unique point in the grid”.
Further, the PPA with the city provided investors short-term cash flows.
The banks indicated that by refurbishing the plant, there would be long-term offtake opportunities with the city, the Department of Energy under its baseload independent power producer programme, industrial offtakers and utilities in neighbouring areas.
The banks have invited interested parties to register their interest to participate in the potential sale process by visiting www.kelvinsale.com.
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