British power generation company Ipsa Group has pulled out of the country.
Ipsa was established with operations in South Africa with the intention of becoming an independent power producer for the greater Southern African region.
The company on Tuesday announced interim results for the six months ended September 2015, that would be the last set of figures including the performance of Newcastle Cogeneration (NewCogen) – its only operational asset.
Ipsa acting CEO Mark Otto said the bureaucracy and politics involved in running the business was simply not worth the trouble anymore.
“The environment here is pretty difficult to work in,” said Otto. “Between the (Department of Energy, the National Energy Regulator of South Africa) and party politics, it was just too much.”
Ipsa’s losses after tax fell by more than 65% to £260 000 (R5.72 million), while net operating cash outflows were down 68% to £204 000 (R4.5 million).
The sale of Blazeway Engineering Limited, previously an Ipsa subsidiary which controlled ownership of NewCogen, was done for a consideration of £2.2 million (approximately R48.6 million) including a cash injection and payments to creditors, and was completed in February. The company was bought by to Sloane Corporation, a private company owned by Peter Earl, who is now also the director of Ipsa, having left the board of the company in July 2015.
Situated in Newcastle, KwaZulu-Natal, NewCogen is South Africa’s first independent gas-fired power station. According to the Ipsa website, it produces both steam and electricity with a nominal power capacity of 18MW.
According to rules of the London Stock Exchange, Ipsa will now be classified as a ‘cash sell’ because of the sale and the company, within six months of the disposal, has to make acquisitions that would constitute a reverse takeover.
“We’re going to revise a strategy for Ipsa, which is not yet finalised. We’ve been approached (to sell) the cash shell. But we haven’t got a final plan of action yet,” said Otto.
“A turbine is the heart of the plant. But then you have other parts, which could be compared to the wheels of a car, and haven’t been sold off yet. People that have bought the turbines are still trying to develop their own projects, and they would buy the balance of that equipment towards the last stage of those projects.”
According to a statement from Ipsa chairperson Richard Linnell, the company is now focusing its attentions on the sale of the balance of plant equipment, with a sale in Italy identified in order to “seek to settle outstanding creditors and in finding a suitable reverse merger partner to maintain the quotations in London and Johannesburg”.
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