Hopewell to sell stake in Tanjung Jati B power project

Hong Kong utility firm Hopewell Holdings Ltd said on Friday that one of its subsidiaries has agreed to sell a power plant in Indonesia to Sumitomo Corp and the Japanese trading house's unit P.T. Central Java Power for US$306 million in cash.

Hopewell's 80 percent-owned P.T. Hi Power Tubanan 1 will sell its stake in the Tanjung Jati B coal-fired power project, engaged in the construction and operation of two generating units with capacity of 660 megawatts each, to the two companies, it said in a statement.

Hopewell will receive about US$215 million of the sale price, its 20 percent partner PT Impa Energi will get about US$53 million, and US$38 million will be used to pay outstanding contractors' bills for the project.

Hopewell said the asset sale would enhance its liquidity and the company does not intend to participate in power plant projects in Indonesia at the present time.

The disposal assets had a total net book value of about US$77 million at the end of 2002.

Hopewell took a provision of about US$564 million against the power plant investment after construction of the project was suspended in mid-1998 amid the the Asian economic crisis.

Hopewell entered into the Power Purchase Agreement relating to the financing, construction, operation and subsequent transfer of the Tanjung Jati B Project. Following the Asian economic crisis in 1997, construction the site of the Tanjung Jati B Project was suspended in mid-1998. Subsequently, PLN commenced a programme to rationalise its power purchase agreements with developers of independent power producer projects. Sumitomo, the lead party in the construction contractor/supplier consortium for the Tanjung Jati B Project, led discussions with PLN with a view to acquiring the Disposal Assets, financing the completion of the Tanjung Jati B Project and leasing it to PLN following completion. (alex)