ADANI Enterprises has secured the right to set up a dedicated rail and port

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project in south Sumatra, Indonesia, through its Indonesian subsidiary PT Adani Global. The total cost for the project is pegged at $1.65 billion.

he BSE-listed company said in a release on Wednesday that its subsidiary has entered into a tripartite agreement with the regional government of Sumatra, Selatan, Indonesia, and the government-owned PT Bukit Asam to build a 250km railway track to transport 35 million tonnes of coal per annum which will later be evacuated by a new port of similar capacity. PT Bukit Asam has the second largest coal reserves in Indonesia.

Adani will transport the coal by connecting the coal mining area of Tanjung Enim to Tanjung Carat and then evacuate the same via a new port built by them.

“Adani will get around 21 million tonnes per annum or 60 per cent of the transported coal at the government notified price and the balance tonnage will be the contract carriage for

Bukit Asam," a senior company official told Financial Chronicle.

The company said the concession period is valid for a maximum 30 years, but can be extended mutually. Besides, the capacity of the coal transported from the area can be extended to 65 million tonnes per annum from the initially agreed level of 35 million tonnes per annum.

The project is expected to take around 48 months and will be funded through a mix of debt and equity.

"We will finalise the funding details in a week, but largely the project would be funded in a 75:25 debt equity ratio by either our Singapore or the Indonesian subsidiary by raising funds in the overseas market," the official said.

Adani, which sources at least 75 per cent of total coal requirement from Indonesia, has another mining setup in East Kalimanthan. Besides the company has acquired a 100 per cent interest in a coal tenement in Australia too.

Adani/BSE Rs 648.60 NSE Rs 651.00