Adani Enterprises secures "Coal Purchase Rights" and enters into "Take or Pay arrangements" for "Port and Rail Project" in Indonesia

26 Aug 2010

Adani Enterprises Ltd. through its step-down Indonesian subsidiary, PT Adani Global, has entered into a binding Tripartite Agreement for setting up a dedicated 'Rail and Port Project' with the Regional Government of Sumatra Selatan, Indonesia and PT Bukit Asamy a Government of Indonesia Coal Mining Company. PT Bukit Asam is one of the leading producers of Coal in Indonesia, and owns second largest coal reserves in Indonesia. This Project provides 'Coal Purchase Rights' to Adani and the infrastructure created will be used for transportation of a minimum volume of 35 million metric tonnes per annum (MMTPA) of coal on a 'take or pay' basis from PT Bukit Asam concessions in South Sumatra. The Concession is initially valid for a maximum period of 30 years, which can be extended by mutual agreement.

The Project envisages the ownership, construction and operation by Adani (through its various subsidiaries) of 250 KM rail line capable of transporting a minimum 35 MMTPA of Coal (expandable to 60 MMTPA). The rail line will connect Tanjung Enim, a coal mining area to Tanjung Carat, where Adani will build a port with matching capacity for evacuating the coal. PT Bukit Asam, will sell 60% of such coal to Adani at government notified price and the balance tonnage would be a contract carriage for Bukit Asam. The long term price for the transportation has been linked to CPI and fuel prices in order to provide a fair return to both parties. The Project is estimated to cost US$ 1.65 Billion and will be constructed within 48 months. The Government of South Sumatra, Indonesia has undertaken to provide and facilitate all permits and approvals and arrange for all land for rail and port required for the project.

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