KPMG have been called in as administrators to sell the Hatfield IGCC + CCS project and coal mining interests of Powerfuel plc. But, somewhat confusingly, according to the 9 December KPMG press release announcing the move, neither Powerfuel Power Ltd, the company developing the IGCC project, nor Powerfuel Mining Ltd, which owns Hatfield Colliery, is "in administration" and "accordingly none of the 380 staff employed at the mine have been made redundant."
Richard Fleming, UK Head of Restructuring at KPMG (who is joint administrator with Brian Green, also of KPMG), said: "The central goal of the administration is to sell the share capital of the mining and CCS development project which sits in Powerfuel plc, the parent company. The day-to-day business of both Powerfuel Mining and Powerfuel Power will not be affected by the sales process.
"Developing low carbon energy generation requires a large amount of capital up front and the CCS development falls £635 million short of the investment needed to progress the project beyond the preliminary stage. The substantial funding gap has not been addressed in the past 12 months and accordingly the project has stalled.
"The administration will enable a sales process to find a new owner, who can both take the CCS project forward and buttress the mine, which also requires around £30 million of capital expenditure for works improvements.
"While the economic environment is still challenging, we are hopeful that we can secure a sale of both companies and will be actively speaking to interested parties from today" (who should contact Christian Mayo in KPMG corporate finance on +44 (0) 113 231 3135).
The Hatfield IGCC+CCS project, which has Section 36 consent, was one of six projects selected for 180 million euro funding under the EU's EEPR (European Energy Programme for Recovery) scheme. The plan was to proceed in phases, starting with a natural gas fuelled CCGT, to be subsequently converted to IGCC with CCS. As recently as October Powerfuel announced an agreement with B9 Coal and AFC energy to install "up to 300 MW of AFC Energy's fuel cell technology alongside" the IGCC plant.
Powerfuel is owned by coal entrepreneur Richard Budge, no stranger to complex financial engineering (including previously rescuing the Hatfield Colliery from bankruptcy) and Russian coal mining company KRU.
Hatfield joins a number of other high profile proposed CCS projects that have run into funding obstacles in recent times, including E.ON's Kingsnorth plan and Fortum's Finncap project at Meri-Pori.
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