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Adani inks agreement for rail, port in Indonesia

BS Reporter  |  Mumbai/ New Delhi 

P>Adani Enterprises Ltd, the flagship company of India’s infrastructure conglomerate the Adani Group, today announced the signing of an agreement for a setting up of a “Rail and Port project” with the Regional Government of Sumatra Selatan, Indonesia and PT Bukit Asam Tbk, a Government of Indonesia coal mining company.

Estimated to cost $1.65 billion, the Rail and Port project will be executed by PT Adani Global, a step-down subsidiary of Adani Enterprises, over a period of 48 months. It will involve the construction of a 250 km railway line and port infrastructure by Adani needed for the transportation and ship loading of upto 60 mmtpa of coal. Adani group chairman Gautam Adani signed the agreement with Alex Noerdin, the Governor of the South Sumatera province of Indonesia and Sukrisno, president director, PT Bukit Asam Tbk in the presence of the Indonesian president Susilo Bambang Yudhoyno.This agreement is pursuant to a tripartite memorandum of understanding signed in August 2010. "These initiatives in Indonesia, Australia and even in India will bring us closer to achieve our stated goal of 20,000 mw power generation, 200 MMTPA of coal mining, 200 MMTPA of cargo handling and owning 20 capesize ship by 2020,” Gautam Adani said in a statement.  

The 250 km railway line will help connect Tanjung Enim, the coal mining area to Tanjung Carat, where the Adani Group will set up a port for evacuating the coal. PT Bukit Asam Tbk, one of Indonesia’s leading coal producers with the largest coal reserve in the country, has conferred “coal purchase rights” to PT Adani Global on take or pay basis with minimum volume of 35 million metric tonnes per annum. This concession has an initial validity of 30 years from signing of the agreement and can be extended mutually.

As per the agreement, PT Bukit Asam Tbk will sell 60 per cent of its coal from the Tanjung Enim area to Adani at a government notified price and balance coal will be used as contract carriage for Bukit Asam. "This landmark deal will further consolidate Adani’s coal sourcing from Indonesia, with the company already operating a coal mine in East Kalimanthan. The coal from its Indonesian and Australian assets in Queensland will not only further enhance the Adani Group’s position as India’s largest thermal coal importer but also give it the required fillip for a rapid expansion of its power and coal businesses, transforming it into the largest private sector mining company in India," the company said in a statement. The Adani Group has also signed a memorandum of understanding for exploring the possibility of setting up a 2 x1100 or 3X660 MW lignite based power plant in Indonesia.

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First Published: Wed, January 26 2011. 00:16 IST