Consortium complete Execution of Agreements for Sarulla geothermal project

Reno, U.S.-based power plant dveloper Ormat Technologies, Inc. announced Tuesday that a consortium consisting of Medco Energi Internasional Tbk; Ormat International Inc., a subsidiary of Ormat Technologies, Inc.; and the Itochu Corporation, has completed the execution of the project documents for the 340-MW Sarulla geothermal project in North Sumatra.

The consortium signed an amendment to the Joint Operating Contract (JOC) with PT Pertamina Geothermal Energy (PGE), a wholly owned subsidiary of the state oil and gas company PT Pertamina (Persero), and, together with PGE, signed the amendment to the Energy Sales Contract(ESC) with the state power company PT Perusahaan Listrik Negara (PLN).

Earlier, the consortium and PLN executed a Deed of Assignment (DOA), whereby PLN assigned and transferred to the consortium the rights and obligations under the JOC and ESC.

The project, located in Tapanuli Utara, North Sumatra, is the largest single-contract geothermal power project to date. The project will be owned and operated by the consortium members under the framework of JOC with PGE. It will be developed in three phases over the next five years, with one Ormat-designed and supplied power generating unit of 110 to 120 MW to be constructed in each phase.

The first unit is scheduled to commence operation within 30 months of financial close, which is expected by the end of 2008. The remaining two units are scheduled to commence operation in stages within 18 months after the first unit's commissioning.

The total project cost is expected to be approximately US$800 million, and it is expected that the Japan Bank for International Corporation (JBIC) will provide the majority of the project financing based on the Umbrella Note of Mutual Understanding signed between the Ministry of Finance of Indonesia and JBIC.

Ormat's equity participation shall initially be 25%, and may be reduced to not less than 12.75%.

Power delivered by the project will serve the base load of PLN's North Sumatra-Aceh grid system and annual electricity sales revenue from the project is anticipated to be approximately $115 million when the full capacity is attained.

The value of Ormat's scope of supply for the project is expected to be over $250 million.

"While the project is still subject to the uncertainty of the closing of financing, encouraged by the interest shown in financing this project by JBIC and other institutions, the Consortium shall make pre-development investments estimated at approximately $15 million before financial closing," Dita Bronicki, CEO of Ormat Technologies, said.(alex)