GCM Resources Regulatory News (GCM)

10 Oct 2005 10:48

Asia Energy PLC10 October 2005 Asia Energy plc ("Asia Energy" or "the Company") Asia Energy submits Power Plant Proposal to the Government of Bangladesh Highlights: • Proposal to build a 500 MW coal fired power plant• Plant expected to consume 1.5Mtpa of coal from the Company's mine• Estimated capital cost of USD$ 476m• Construction to commence in 2007• Power expected to be sold under 25 year PPA Asia Energy Corporation (Bangladesh) Pty Ltd, the wholly owned subsidiary ofUK-based Asia Energy PLC, on Sunday 9 October presented to the Government ofBangladesh (GoB) a proposal to build a 500 Megawatt (MW) mine-mouth power plant.The new power plant will firmly establish coal as a viable source of energy inBangladesh and present an unparalleled opportunity to generate electricity froma natural resource other than gas and imported oil. The proposal, presented to Board of Investment ('BOI'), covers the development,financing, construction, ownership, operation and maintenance of a single unit500 MW coal-fired power plant, (the 'Phulbari Power Project'). The power plantwill bring together the rapidly growing energy needs of Bangladesh and thedevelopment of the Phulbari coal mine. Asia Energy has already submitted its Scheme of Development for the Phulbarimine to the GoB. The open pit operation will become the largest coal mine inBangladesh, producing 15 Mtpa (million tonnes per annum) of high quality thermaland metallurgical coal and a range of domestic coal over the mine life of 35years. It is intended for the Phulbari Power Project to operate primarily as a baseload plant and generate an average of 3,700 GWh of electricity per year. Powerwill be sold to the Bangladesh Power Development Board ("BPDB") and or to theRural Electrification Board ('REB') under a 25-year Power Purchase Agreement('PPA'). If the proposal is accepted, a letter of intent is expected be signedwith the GoB in support of the project followed by negotiations of the finalagreements using current contracts for private power projects as the basis. Asia Energy commissioned Aldwych International Ltd to prepare the Phulbari PowerProject and design the plant. Aldwych International is a power plant developmentcompany based in the UK with extensive worldwide experience in developing,financing, constructing, and operating power plants. Aldwych brought together aninternational team to work on the Phulbari Power Project, including Black &Veatch International Ltd and O&M Sulutions (Bangladesh) Ltd. The proposal issubmitted in the form of a bid in conformance with the Private Sector PowerGeneration Policy of Bangladesh ('PSPGP') to facilitate appraisal and to benefitfrom the incentives applicable under that policy. Asia Energy will conduct all the required environmental and technical studies toestablish final binding tariffs which will pave the way for completion of thePPA and associated coal purchasing arrangements and the scheme of finance. The plant will be designed, constructed and operated to international standards,using modern emission control systems to meet both local and relevantinternational environmental emission limits. Asia Energy proposes to locate thepower plant within the Mine Project Area to minimise the effect of thedevelopment on the local communities and to optimise the management and controlof environmental impacts. Asia Energy intends to hold international competitive tendering for the majorProject elements to ensure that the process is transparent and that the plant isconstructed at a competitive cost. With construction scheduled to start in late2007, the plant would be in operation by 2011. EPC costs are currently estimatedat US$476 million. Asia Energy intends to finance the project, on a "projectfinance" and "limited recourse" basis, using both international and localfunding sources. Supply of coal to the power plant will diversify and strengthen the market basefor the Phulbari mine. It is expected to provide a ready outlet for 37 Milliontonnes of domestic grade coal over the 25 year life of the PPA at attractiveprices. The proposed power tariff will support a coal price in today's terms ofaround US$45/tonne, which after adjustment for energy and ash levels, isconsistent with current prices for internationally traded thermal coal. Beinghigher in ash and lower in energy than Phulbari export thermal coal, the coalsupplied will not only suit the purpose designed coal pulverisation andcombustion facilities at the power plant, but will add to the market for thehigher ash fraction of coal products. Overall, the power plant coal supply is aviable economic opportunity to augment the mine's competitiveness in theinternational marketplace. The proposed Phulbari Power Project can guarantee a long-term, economicallycompetitive supply of reliable base load power generated from indigenous coal,and therefore offers significant benefits to the Government and the people ofBangladesh. A growing power shortage has been identified by the GoB as acritical bottleneck in economic development, with the country needing to doubleits electricity power output over the next decade. The country has an installedcapacity of 4800 MW, and demand is forecast to increase to more than 8000 MW by2011. An increase in coal fired generating capacity, based on the strategicallyimportant coal deposits in the Northwest of the country, will reduce the currenthigh reliance on gas reserves and help Bangladesh meet it development goals. For further information please contact: Michael Frayne, Joint Managing Director Justine Howarth, Cathy Malinsmichael.frayne@asia-energy.com Parkgreen CommunicationsDavid Lenigas, Joint Managing Director Tel: +44 (0) 20 7493 3713david.lenigas@asia-energy.com justine.howarth@parkgreenmedia.comAsia Energy PLC cathy.malins@parkgreenmedia.comTel: +44 (0) 20 7079 1798, Fax: +44 (0) 207491 2758info@asia-energy.com; www.asia-energy.com This information is provided by RNS The company news service from the London Stock Exchange