Johannesburg — IN A breakthrough for independent power generation in SA, Eskom has concluded a power purchase agreement with Independent Power SA (Ipsa), the company announced yesterday.

Ipsa said yesterday that in terms of the agreement, electricity from its Newcastle gas-fired power plant will be sold to Eskom until March 2013.

The deal will lesson Ipsa's financial burden. "With these agreements in place and the refinancing completed, Ipsa expects to be able to look forward to a period of sustained revenue generation at NewCogen (subsidiary Newcastle Cogeneration)."

The company had been frustrated that the plant had been gathering dust because it could not enter into a power purchase agreement with Eskom.

Kannan Lakmeeharan, Eskom MD for system operations and planning, yesterday said the utility was also on the verge of signing a power purchase agreement with Sasol for a 240MW project. "The agreement will run until 2014 or 2015," he said.

Mr Lakmeeharan said Eskom had also signed a power purchase agreement with Sappi for a 24MW project. That agreement ends in March 2013.

The agreements are a step towards the government's target of a 30% private sector contribution to SA's power supply.

Through NewCogen, Ipsa has been supplying power to the electricity grid since June in terms of a short-term agreement with Eskom, which expired yesterday. Ipsa said the Newcastle power plant's start date under the contract would come after the finalisation of a long-term gas agreement with Sasol Gas.

"We are delighted that this contract has been signed. We are grateful to the tireless efforts of all those who have worked hard to enable us to achieve this result. I am looking forward to a return to full operations as soon as possible," Ipsa chairman Richard Linnell said yesterday.