BlackGold Natural Resources subsidiary PT Samantaka Batubara (SB) has entered into a conditional term sheet with China Huadian Engineering Co Ltd for the joint development, construction, operation and maintenance of a 2 x 300 MW coal-fired power plant in Riau province, Indonesia.
The term sheet follows an earlier announcement on December 28, 2015 regarding BlackGold’s entry into a consortium agreement with China Huadian for participation in a bid to provide electric power to PT PLN (Persero).
Under the term sheet for the proposed joint venture, it is anticipated that BlackGold, its potential third party affiliate and/or working partner(s), if any, and China Huadian will hold equity interests of 44%, 5% and 51%, respectively in the proposed Riau 1 project joint venture company.
These shareholders shall make capital contributions to the proposed joint venture company in proportion to their respective shareholdings in it, amounting to a total capital contribution that is equivalent to a maximum of 25% of the total cost of the project.
The consummation of the proposed joint venture is subject to, amongst others, the successful award of the bid by PLN to the consortium of PT SB and China Huadian.
Pursuant to the term sheet, PT SB shall negotiate the power purchase agreement with PLN and shall be appointed long-term exclusive supplier of coal to the project for 30 years.
China Huadian shall be appointed as the EPC (engineering, procurement and construction) and O&M (operations and maintenance) contractor, and shall secure debt financing required for the project.
BlackGold's chief executive officer Philip Cecil Rickard said, “The signing of this Term Sheet marks the next step forward for both parties as it irons out the salient terms of the proposed joint venture between the parties.
"Leveraging on the capabilities of China Huadian in power engineering and BlackGold’s expertise in coal mining, we look towards securing the award of the bid for development of the Riau-1 project.”