Bruce Whitfield:
Well, concerns this weekend about the potential of blackouts and of course huge anger at Eskom for its failure to supply us with power. The answer may as it so often does, lie with the private sector.

Ipsa is a company listed on AltX and also on London's Alternative Investment Market, the chief executive Peter Earl is on the line to us from France where he is skiing this weekend and as much as I would like to know about the depth of snow, we are more worried about the power crisis in South Africa. You are going to be opening next month a power station at Newcastle in KwaZulu Natal.

Peter Earl:
That?s right, ironically we scheduled this morning to announce that we are on track and on time and it is going to be South Africa's first gas-fired power plant and yet it seems to coincide with the bad news in the overall electricity industry with power cuts.

Bruce Whitfield:
Manna from heaven for you, isn't it Peter?

Peter Earl:
Well we are pretty fortunate with the timing but it is not good for South Africa. What South Africa needs is new power capacity and that is where we come in and it means as much as we can provide and more than that.

Bruce Whitfield:
Explain to me exactly how much you are going to be providing? As I understand it 16 MW. In terms of what South Africa requires on a daily basis how big is that?

Peter Earl:
It is absolutely tiny in absolute terms. Sixteen MW compares with about 30 000 MW in stored capacity with Eskom for the whole country but the point is that it is a prototype plant in that it is South Africa's first combined cycle gas-fired plant.

So it has got the lowest carbon dioxide greenhouse gas emissions of any power plant in the country and it is a prototype for a much bigger 1600 MW plant which we are building at Coega in Port Elizabeth. So it is a little brother for the big one that should come in in 2008.

Bruce Whitfield:
The primary difference then between gas and coal powered plants, which as I understand it we generate most of our power from coal in South Africa, is the cleanliness aspect as well. Is it considerably cheaper to generate power using gas than it is using coal?

Peter Earl:
It is not: gas is a more expensive fuel in South Africa but the point is that you get a lot more bangs for your buck. A typical Eskom coal-fired plant converts 35 percent of the content of fuel into electricity, we are up at around 60 percent level. So it is just that we use a more expensive fuel more efficiently and that is why we put out a lot less CO2 for every kilowatt-hour that we produce.

Bruce Whitfield:
And then the big question is who will buy your power? The idea is I am sure to sell it to Eskom and they can then sell it on to consumers.

Peter Earl:
That?s right. Eskom doesn't really have a problem with that. The thing about our power plant is that we can turn it off and turn it on at will. So it is very flexible and equally important we subsidise the cost of our electricity to Eskom by selling steam from the power plant to industrial uses and that means they don't have to use coal-fired boilers to heat up water. We get that as a by-product of producing electricity so it is a massively green power plant and very efficient.

Bruce Whitfield:
But you don't actually have an agreement with Eskom yet.

Peter Earl:
There is a system, which the National Electricity Regulator put in place for combined heat and power plants like ours to have a regulated tariff and Eskom is very happy to pick up our electricity at that regulated tariff.

Bruce Whitfield:
But when do you actually sign an agreement with them? I am hoping that on the day you flick the switch or whatever it is you do at the power station that immediately that current surges on to the national grid and we can actually use it.

Peter Earl:
That is the plan, I mean we are aiming and the regulator is aiming for the 23 February. They have to test our plant to make sure that it is working to South Africa's standards, it will be, it is a great plant. That is the date, 23 February, when we expect commercial operations and supplying electricity into the South African grid.

Bruce Whitfield:
What about the Coega plant, the considerably bigger plant? When are you hoping that that will be up and running?

Peter Earl:
In the middle of 2008 for the first thousand megawatt and then 2009 for the remaining 600 MW and that could even be scaled up. South Africa needs 3000 MW a year just to meet current demand and it is because of that growth in electricity demand that Eskom really has been caught very short in the last 24 hours.

Bruce Whitfield:
We hear that it takes seven years to commission a power plant from the time I suppose you'd turn the first sod to when you get the first electricity out of it. The power plants that you are developing, does it take that length of time to grow them, to develop them, the gas-fired power plants?

Peter Earl:
Absolutely not and that is one of the big advantages of gas. We are less than 15 months from the first digger going on-site to the plant hitting commercial operation in February and it is the same kind of scale at Coega.

There is some red tape associated which can hold things up a bit but in terms of how long it takes us to build the plant and get it up and running, 15 months for a gas-fired plant and that is why South Africa really does need some new capacity in gas very quickly.

Bruce Whitfield:
Is this the future then of power generation in South Africa? Not to rely on the state but to have private enterprise come in and actually come to the rescue.

Peter Earl:
We think so but we say that because we are a private?

Bruce Whitfield:
You would yes.

Peter Earl:
A balance is needed, South Africa needs to maintain these state-owned plants that are a legacy from the past but if you want new thermally efficient carbon dioxide low emission friendly then you really do need gas-fired.

Eskom has no experience of building those, we have a lot of experience in building them and operating them all around the world and that is what we are bringing to South Africa.

Bruce Whitfield:
Peter Earl, we look forward to hearing about it the day you launch and hopefully Eskom has got the paperwork signed to enable them to actually take some of that electricity on.

What an interesting story, the chief executive officer at Ipsa, on the line to us from France, celebrating his birthday tomorrow and no doubt independent power generation will take him to lots more holidays in France in the future.