RI agrees to buy power plant: Hopewell

RI agrees to buy power plant: Hopewell

HONG KONG (Bloomberg): Hopewell Holdings Ltd. Chairman Gordon Wu said the Indonesian government agreed to buy an unfinished power plant for $200 million, giving it money to repay debt and invest in China.

Hopewell wrote off $1.3 billion when Indonesia and Thailand canceled infrastructure projects in 1998. Now, said Chairman Gordon Wu, the Indonesian government has agreed to buy the unfinished Tanjung Jati B power plant. Hopewell wrote off $620 million when Jakarta canceled the project in 1998.

"We offered to sell the electricity plant cheap," Wu said in an interview. "They've agreed on an in-principle basis and have put it under the national budget," he said.

Clearing debt could help Hopewell lure back investors after its stock tumbled 88 percent since Asia's financial crisis began in mid-1997. While Hopewell stumbled in Thailand and Indonesia, its road projects in southern China are generating strong returns.

The China roads, which return about 12 percent a year, will have HK$1 billion ($130 million) in annual sales for Hopewell in three to four years, he said.

The 67-year-old Wu's optimism about resolving Hopewell's dispute with Indonesia may reflect his desire to clean up problems before he retires as planned at about age 70, passing the business to his 28-year-old son, Thomas Wu.

"In the coming five years, I'll be slaving away at my work," Wu said, adding he has things to accomplish before "After that, I want to study Chinese history."

Hopewell shares rose 8.6 percent to HK$3.15. The stock has declined 32 percent this year, compared with a 13 percent decrease in the Hong Kong All-Ordinaries Index.

Granted, the Indonesian pact is valuable only if the government actually pays. Neither the Indonesia government nor the state-owned electrical utility, PT Perusahaan Listrik Umum responded to requests for comment this week on whether Hopewell has struck an agreement.

"It is difficult for Indonesia to pay compensation right now," said Raden Pardede, senior economist at Danareksa Securities in Jakarta. The government "doesn't want to resolve these cases one by one. If we compensate one then others will ask for the same treatment as well."

Wu doesn't share these doubts. He said Indonesia should complete the purchase of Tanjung Jati next year. Hopewell owns the central Java plant with Siti "Tutut" Hardiyanti Rukmana, a daughter of Indonesia's ex-president Suharto.