ISDN Holdings acquires 80% stake of PTC

By Romel S. Gurky

SGX-listed ISDN Holdings Limited, an integrated engineering solutions provider for diverse industries, has through its wholly owned subsidiary Aenergy Holdings Limited, has entered into a sale and purchase agreement to acquire 80 percent equity stake in PT Charma Paluta Energy (PTC) -- a company incorporated in Indonesia with primary businesses in building, owning and operating hydroelectric plants and related businesses -- for US$450,000 from its equal and joint owners -- Charles D Marpaung and Sugiharto Sulaiman -- who each sold 144,000 shares to offer a total aggregate of 288,000 shares.

The company said in a statement obtained Wednesday that following the proposed acquisition, PTC will subsequently be 80 percent-owned by ISDN while the remaining 20 percent shares will be held equally by its current owners. This latest milestone follows the announcement of a Memorandum of Understanding on 27 June 2013 that preceded the sales and purchase agreement. The shares acquisition will be funded by ISDN?s cash reserves.

?North Sumatra with a population of 13 million based on the 2010 Census, is currently underserved of its energy needs that is currently significantly reliant on diesel generator-power plants that are relatively more expensive. In addition to the demand by diverse industries such as plantations, minerals and manufacturing, there is also huge potential of cross-island supply to Java,? said ISDN Managing Director and President Teo Cher Koon.

PT Charma Paluta Energy has entered into a power purchase agreement (PPA) with PT PLN (Persero), Indonesia's state-run power distribution company to build, own and operate a 4.6MW mini hydropower plant at Aek Sisira Tarabintang Sub-district, Humbang Hasundutan, North Sumatra province. The PPA states PT PLN will purchase the energy output at a tariff rate of Rp 787 or US$0.08 per KWh for a tenure of 20 years.

Based on the feasibility studies originally conducted, the hydropower plant is expected to generate 27GWh annually. This is estimated to generate approximately US$2 million per year with running costs expected to cost between 0.7 and 0.5 US cents per KWh while the investment cost is projected to amount to approximately US$10 million.

Construction is expected to commence at the beginning of next year and is expected to last 18 to 24 months. The first income stream is expected to flow in after full operations commences.

In earlier announcements ISDN had indicated its target of developing a series of hydropower projects that could total 100MW by the end of FY2014 with a view of doubling it in the next three to five years. This includes three hydropower plants in Sulawesi for a total of 18MW installed base capacity and an additional fourth that is awaiting in-principle approval, the 126MW-Laa River hydropower plant, the largest to-date, that would mean ISDN could exceed its original target of 100MW earlier than FY2014.

Sumatra offers three mini hydropower plants for ISDN, including the proposed facility that forms the subject of this announcement and another two for which Memorandum of Understanding has previously been signed. In total the Group could amass a combined total of 42MW installed base capacity in Indonesia, when fully realized.

Editing by Reiner Simanjuntak