HK's Hopewell to postpone Tanjung Jati Power projects

HK's Hopewell to postpone Tanjung Jati Power projects

HONG KONG (Dow Jones): Hopewell Holdings Ltd. chairman Sir Gordon Wu said the Hong Kong-based infrastructure developer's US$1.77 billion Tanjung Jati B power generator project would be postponed for one to two years.

The Tanjung Jati B project is 70 percent-owned by Hopewell, with the remaining stake held by Indonesia's IMPA Energy Co.

Work on the $1.62 billion Tanjung Jati C project, which is 80 percent held by Hopewell, will also be stalled until the country begins to recover, Wu said.

Hopewell has already invested $450 million in the Tanjung Jati B project, which is about one-third complete, Wu said. Tanjung Jati C won't go forward until B is completed, he said.

It's inevitable the projects would have to be delayed," said Hopewell's Wu. "Banks want to take a more cautious approach" to financing any projects in the beleaguered economy, he said.

Indonesian companies are already sitting on billions of dollars in bad debt.

Wu denied that either of the two power projects have ties to former president Soeharto's family, which might further hinder the projects' viability now that the Soeharto name has become more of a liability than an asset.

Several news reports suggested that Hopewell won the contract to build the second power project because of its ties to Soeharto's oldest daughter Siti Hardiyanti Rukmana, an allegation Wu flatly denies.

There is "no Soeharto family involvement" in the Tanjung Jati projects "as far as I know," he said.

"They gave us the project because we were the lowest bidder," he said.

Wu offered a 5.73-US cent per kilowatt hour tariff, below its original bid on the first project of 6.45 US cents per KWH.