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Federal wins Indon JV utilities supply deal
Federal wins Indon JV utilities supply deal

(2007-08-29)

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Mr Koh: Delighted to have made a breakthrough in the regional energy sector

  FEDERAL International (2000) Ltd has clinched a utilities supply contract that is expected to generate revenue of about US$178 million over 10 years.

  The contract, which it won together with an Indonesian partner, has led to plans to build an integrated gas and power plant at a cost of US$18.8 million.

  Construction of the integrated plant will start next month. It is expected to be completed by August next year. The plant will supply gas and electricity to PT Lontar Papyrus Pulp and Paper Industry, a unit of the Asia Pulp & Paper Group. Lontar Papyrus operates paper and pulp mills in Indonesia's Jambi province.

  'We are delighted to have made a breakthrough in the regional energy sector through our strategic alliance with our Indonesian partners,' said Federal International's executive chairman and CEO K K Koh. 'The contract awarded by Lontar Papyrus reflects the success of the group's efforts in diversifying into the power utilities business and becoming an integrated service provider in the energy sector.'

  As part of the deal, Federal has entered into a cooperation agreement with PT Tanjung Jabung Power (PT TJP) to set up a joint venture firm.

  Called PT Jabung Gas Plant, the joint venture will be 60 per cent held by Federal Hardware Engineering Co Pte Ltd, a wholly-owned subsidiary of the group. The remaining 40 per cent will be owned by PT TJP, which has an option to raise its stake by another 20 per cent in future.

  The joint venture will build, operate and own the new plant, consisting of a 6MW gas power plant and a liquefied petroleum gas refinery with a daily capacity of 40-57 tonnes. The supply contract is for a period of 10 years, with an option to extend for a further five years. The plant may also sell its LPG and condensates to other third parties.

  PT Jabung Gas Plant will have a paid-up capital of 1.25 billion rupiah. Federal said its investment will be funded by internal resources and bank borrowings.

  Mainboard-listed Federal provides engineering, procurement and construction solutions to the oil and gas related industries. Last year, the group diversified into the marine logistics sector by offering vessels for charter. Earlier this year, it also ventured into the utilities sector, after clinching a $54 million contract to supply steam and electricity to Natural Fuel Pte Ltd on Jurong Island.

  Shares of Federal closed down half a cent yesterday at 74.5 cents.

《The Business Times》


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