The reason is lack of agreement on the price of the power to be produced.
The contract for constructing geothermic power stations in Indonesia that Technologies (NYSE:ORA), a unit of Ormat Industries (TASE: ORMT), signed three years ago, is still stuck. The main reason is unrelated to Ormat. The delay stems from lack of agreement between the members of the consortium due to sell the electricity and the local electricity authority over the price to be paid for power generated in the power stations.
The project in Indonesia, named Sarulla Geothermal Power Project, is estimated to be worth about $800 million. The project is to build three power stations with a total geothermal ouput capacity of 340 megawatts. The power plants will be constructed and operated by a consortium of companies, comprising Medco Energy (37.25%), Kyushu Electric Power and Itochu (Japanese companies that hold 25% each), and Ormat Technologies (12.75%).
Although Ormat has a low share of the ownership of the project, most of its revenue, estimated at $200 million at the time the contract was signed, is supposed to come from the supply of equipment for the construction of the geothermal power stations.
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2010
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