Indonesia's Adaro scores 20-year coal-supply deal in Thailand

Indonesia's Adaro scores 20-year coal-supply deal in Thailand

Indonesian coal major Adaro Energy's push for long-term stability received a
big boost from its recent agreement to supply to the Electricity Generating
Authority of Thailand for about 20 years as well as sell a stake in its main
mining subsidiary to the state-owned entity.

Adaro Energy's quest to secure stable customers, including power plants it
plans to build and manage, comes at a time when growing environmental
concerns are making coal-fired power generation less popular.

The EGAT will acquire an 11.53% stake in Adaro Indonesia through its
subsidiary, which will purchase all new shares to be issued by the Adaro
unit for an estimated $325 million. Adaro Energy will continue to hold the
remaining shares in Adaro Indonesia.

An Adaro Energy official said the deal will help the company capture
long-term demand for coal and give it the financial cushion needed to cope
with rougher times in the coal market.

Cheap and abundant

As environmental regulations have grown more stringent, so too have rules on
coal-based power generation. But in emerging Asia, where power demand is
surging, coal remains a popular source of energy because of its low cost and
wide availability.

Adaro Energy CEO Garibaldi Thohir does not see coal's primacy in the region
ending anytime soon.

To ensure that remains the case, Adaro Energy is scouting for long-term
supply deals with power plants at home and abroad. It helps that the company
owns one of Indonesia's largest single-site coal mines, in southern
Kalimantan.

Thohir said his company is keen to find customers elsewhere in Southeast
Asia, including Vietnam. But domestic demand is also a key target.

Adaro Energy has high hopes for coal-fueled power plants it is building at
home. One high-profile project is a long-term supply deal for a large plant
it is constructing in central Java in cooperation with Japanese players
Electric Power Development (also known as J-Power) and trading house Itochu.
The new facility will have a generation capacity of 2 million kilowatts and
is slated to be completed around 2020.

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Link to Original Article:
http://asia.nikkei.com/Business/Companies/Indonesia-s-Adaro-scores-20-year-c
oal-supply-deal-in-Thailand?n_cid=NARAN012

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com