Report: Adani invests $1.65bn in Indonesian railway

Indian infrastructure developer Adani Enterprises has entered into an agreement with the Indonesian government to build rail and port infrastructure in the South Sumatra province. The company plans to make an investment of $1.65bn, which will give it exclusive rights over 60% of the country’s coal reserves.

Indian developer Adani Enterprises has signed a deal with the Indonesian government and Bukit Asam, a government-owned coal mining company, to build and operate a railway line to transport coal in the province of South Sumatra, according to media reports.

Under the $1.65 billion, tripartite agreement Adani will develop a dedicated rail and port project in South Sumatra and will have rights over 60 percent of the coal reserves of Bukit Asam. The deal will make it easier for Adani to source fuel for its power plants in India.

Reports suggest that Adani, through Indonesian subsidiary Adani Global, plans to build a coal terminal with an annual capacity of 50 million tons. The company aims to start construction of the 270-kilometre railway next year and should have it completed by 2013, Bloomberg reported.

Currently, Adani imports 35 million tons of coal and is likely to increase this to about 60 to 70 million tons in the next three to four years, reports suggest.

Adani joins other Indian firms – such as Reliance Power, Essar Group and Tata Power – in securing coal assets in Indonesia to supply fuel for power consumption in India.