Adani Enterprises signs $1.65 bilion deal for port, rail line in Indonesia

Adani Enterprises on Tuesday signed an agreement to develop $1.65 billion port and rail infrastructure project in Indonesia. The group will also explore options to set up a lignite-based power plant in that country.

The project includes developing a 250-km railway line and the required port infrastructure for the transportation and shiploading of up to 60 million tonnes per annum (mtpa) of coal. The project, expected to be completed in four years, would be undertaken by PT Adani Global, a step-down subsidiary of Adani Enterprises.

The port would be set up near Tanjung Carat and the railway line will connect Tanjung Enim, the coal mining area, with the port. As per the agreement, PT Bukit Asam Tbk, the Indonesia government owned mining company, will sell 60% of its coal from this area to Adani at a government-notified price and balance coal will be used as contract carriage for Bukit Asam.

The group has also signed a memorandum of understanding (MoU) to explore options in developing a lignite-based power plant in Indonesia. While the company is yet to identify a location, the capacity is estimated to be either 3x660 mw or 2x1100 mw. The MoU has been signed under the bilateral India-Indonesia economic framework.

At present, the Adani group is the largest importer of coal in India with around 30 million tonne coal. The company aims to manage around 200 million tonnes of coal by 2020.The group started its mining operations in Indonesia in 2008.

“The Adani group is one of the very few Indian players with coal assets in Indonesia which has a proper logistics infrastructure plan in place, which is equally important,” said a top official of a company which owns coal mines in that country.