ISDN to acquire equity stake in Datara power project

By Ruli Setiawan

SGX-listed ISDN Holdings Limited, an integrated engineering solutions provider for diverse industries, through its wholly-owned subsidiary, Aenergy Holdings Company Limited, plans to acquire a larger equity stake in the Datara mini hydropower project in South Sulawesi, through a proposed joint venture agreement between Indonesia-based PT SDM Bahagia Sejahtera and the Gowa Regency Government in South Sulawesi.

When the joint venture company is established, ISDN through SDM will own 76 percent of its share equity while the Gowa Regency Government will retain 20 percent ownership. The Datara mini hydropower project is targeted to have an installed base capacity of 10 megawatt, the firm said in a statement filed with the Singaporean Stock Exchange on Friday.

In a separate statement, ISDN said recently entered into a sales and purchase agreement to acquire 95 percent of SDM?s shares from Johnny Sudjono Elias and Albert William Lumy for US$10,000. SDM is in the business of hydropower energy but has no current operations, thus no meaningful book value and net tangible asset value. The acquisition is subject to the approval by the relevant Indonesian authorities.

?We feel privileged to be working directly with the Bupati?s (Regent) office in this mini hydropower project that will supply essential power services to the people, businesses and industries in South Sulawesi. Demand for electricity has been on the rise as Indonesia and its major islands and provinces develop rapidly and continue to attract foreign direct investments,? Teo Cher Koon, ISDN Managing Director and President, said.

?We appreciate the support and hospitality we have received from the local grassroots and business community and hope the Datara mini hydropower project will offer a means towards a better quality of life for its people and as a showcase for future developmental endeavours between the public and private sectors,? Teo added.

Under the JV agreement, the Gowa Regency Government will provide the land for the development of the Datara hydropower project that represents its equity contribution. It will act as the local point of contact to obtain the necessary permits and approvals for the pre to post-developmental phases of the hydropower facility construction.

ISDN will be responsible for the financing as well as the pre to the post-development operations and management of the hydropower plant including the provision of progress reports throughout the course of construction. The 10 MW power station is expected to produce approximately annual energy output of 53 GWh and construction is expected to commence in 2014 and to last 18-24 months. The first income stream is expected to flow in after full operations commences.

ISDN had previously in June this year announced its proposed 40.8 percent acquisition of PT Prisma Karun Energy to pave the way for its investment and development of the same Datara project. This latest proposed joint venture agreement with the Gowa local government shall supersede ISDN?s earlier collaboration with PT Prisma Karun.

Teo explained, ?The pre-agreed conditions of the previous partnership were not fulfilled and the contract has since become void. Our planned partnership with the Gowa local government has given a fresh lease of life to the Datara project.

?With our larger equity stake and by working directly with the key stakeholders, it has given us a stronger mandate as well as potentially bringing greater shareholder value,? he concluded.

Editing by Johannes Simbolon