Hopewell suspends RI power project

Hopewell suspends RI power project

HONG KONG (AFP): Hong Kong-based Hopewell Holdings Ltd. said
Wednesday it had suspended a huge power project in Indonesia
which may require it to make a provision of as much as US$420
million.

It is the second setback faced by the infrastructure firm in
Southeast Asia due to the regional financial crisis after the
shelving of an elevated railway project in Thailand.

In a statement, Hopewell said it had issued a Force Majeure
notice in relation to the Tanjung Jati B (TJB) power project in
central Java, Indonesia, on which construction began in 1996.

A Force Majeure is an event outside the control of either
party to a contract that may excuse it from fulfilling its
obligations, and the notice was served to Indonesian state-owned
power company PLN.

Hopewell chairman Gordon Wu said the notice had been issued to
safeguard Hopewell's investment in Indonesia, which is battling a
severe financial crisis.

"The background to this notice is that current circumstances
in Indonesia have led to a loss of confidence amongst financiers
and/or potential financiers to the TJB project..," the company
statement said.

The Hong Kong-based firm has an 80-percent stake in the
project, and has incurred costs of about HK$4.8 billion (US$420
million) to date.

"The Board is currently considering making provisions against
such costs. The amount of provisions is still being finalized and
will be announced as soon as possible," the company statement
added.

Hopewell said it would not make any further material
contribution to the TJB project because it was not currently
known how long the events of Force Majeure were likely to last.

Wu, however, said: "I believe the contract can be successfully
completed and we will continue to work closely with the
Indonesian parties to enable work on the project to resume as
soon as possible."

Hopewell's board believes the project will be successfully
completed once it receives renewed support and commitment from
financiers.

The power project is a 1,320 megawatt coal-fired power plant
awarded on a build-own-operate basis. Hopewell has the right to
operate the plant for 30 years.

Hopewell said the project originally scheduled for completion
in 2000 was 70 percent complete.

The suspension was another blow to Hopewell following a
stalled elevated railway project in Bangkok.