Canadian firm eyeing Sumatra power plant, oil projects

Canadian firm Ona Exploration Inc. said on Wednesday that it was committed to its intention of acquiring a coal-fired power plant project in North Sumatra and Dutch oil wells project in South Sumatra.

The company signed in January 2006 a letter of intent to acquire affiliated Canadian company Can Power Corporation (CPC)'s interest in a 3 x 35 MW coal fired power plant in Medan, North Sumatra through share swap. CPC has 51% controlling interest in a joint venture with PT Cahaya Sakti (PTCS) of Medan, North Sumatra that will build the power plant in Medan with an investment of US$110 million.

PTCS has all of the major approvals and documents in place for the project, including the Power Purchase Agreement (PPA), Long Term Fuel Supply Agreement, and Environmental Permits, said Ona.

The JV intends to engage a turnkey contractor from China to develop and construct the power plant. The Chinese firm will also handle the plant?s startup and operation.

In addition, PTCS's wholly owned subsidiary, PT Turbindo (PTT), has a coal mine concession covering 22,500 hectares, which has an estimated coal deposit of 200 million tons rated at 4,500 to 5,200 kilocalories per kilogram (kcal/kg). The deposit located in Palembang, Southern Sumatra is ready for exploitation and will guarantee fuel supply for the proposed power plant under a long-term contract.

The JV will sign a 20-year contact with PLN to supply electricity to the Medan Industrial Estate. The power will be sold at US$0.05/kW-hr from the first through the third year, and the price would be increased by 2% per annum for the minimum contract amount.

Ona has also signed a deal to take over from CPC a project to develop some 300 old oil fields that were abandoned during the Dutch colonial era in South Sumatra. The company will team up with local company PT. Petro Muba on the project. (alex)