Andalas Energy and Power Plc (LON:ADL) shot up around 75% in Tuesday’s early deals after it announced a new consortium agreement which foresees the development of a wellhead power project in Indonesia.
The AIM-quoted firm has signed the deal with PT PP Energi (PPE), a subsidiary of state-owned Indonesian construction and engineering group PT PP (Persero), for a proposed Jambi-1 which would involve a 30 megawatt gas-fired power facility.
Andalas highlighted that the deal represents a major milestone for the company and it is the first of three possible projects under a recently agreed framework arrangement with PPE. It is anticipated that Jambi-1 will generate more than US$10mln of gross revenue per year for 20 years.
Talks will now advance to finalise gas sales terms for the project as well as grid study evaluation and front end engineering design (FEED).
Together Andalas and PPE will review project financing options via existing Indonesian and international banking relationships.
David Whitby, Andalas chief executive, said: “This Agreement is a value trigger event for Andalas. With our internal forecasts indicating project revenue in excess of US$10m per annum, the Jambi-1 project has the potential to transform the business and sets the platform to develop further power projects in tandem with PPE.”