194 Adaro Energy Annual Report 2009
From Us to Y
ou
Running Adaro
Management Report
Owning Adaro
Governing Adaro
Financial Report
Contact Us Corporate Social
Responsibility Adaro in Summary
www.adaro.com
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 556
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009 AND 2008
Expressed in million Rupiah, unless otherwise stated
39. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued a.
Coal mining, transportation, barging, transhipment, and other agreements continued
In addition, Adaro has also entered into a fuel supply agreement with PT Shell Indonesia “Shell”. Adaro is required to pay Shell a price, based on a formula which includes the amount of fuel supplied and the market price of fuel. Adaro is also
required to purchase a certain minimum yearly volume of fuel.
Contractor Agreement type
Agreement date Contract period end
PT Pamapersada Nusantara Coal mining and transportation
7 September 2009 31 July 2013
PT Bukit Makmur Mandiri Utama Coal mining and transportation
13 November 2008 31 December 2013
PT Rahman Abdijaya Coal mining and transportation
14 December 2008 31 December 2013
PT Rante Mutiara Insani Coal mining and transportation
22 February 2010 22 February 2015
PT Pulau Seroja Jaya and PT Pulau Seroja Jaya Pratama
Coal barging 30 November 2007
31 December 2010 PT Batuah Abadi Lines
Coal barging 18 February 2000
30 June 2012 PT Shell Indonesia
Fuel supply 8 December 2009
1 October 2022 SIS provides mining contractor services to various coal producers. Under the agreements, SIS provides labour, equipment
and material for overburden removal, coal mining and coal and overburden hauling, and is required to meet certain minimum production requirements for these activities. SIS receives a service fee calculated on a monthly basis, based on a formula
which includes several adjustment clauses.
Coal producer Agreement date
Contract period or production level metric tonnesMT
PT Berau Coal Binungan H3N 22 November 2004
31 December 2010 PT Berau Coal Binungan H4
27 December 2004 31 December 2010
PT Berau Coal Binungan Blok 1-4 1 March 2007
31 December 2010 PT Berau Coal Sambarata
25 February 2004 31 December 2011
PT Berau Coal Sambarata Blok B-1 21 January 2008
14 July 2012 PT Sumber Kurnia Buana
10 May 2005 9 May 2010 or
certain production level PT Borneo Indobara
17 October 2006 31 August 2014 or
certain production level PT Indomining
14 August 2007 13 August 2012 or
certain production level PT Tunas Muda Jaya
8 April 2009 2013
or certain production level The receivables arising from coal mining contract between SIS and the coal producers were pledged under the Senior Credit
Facility refer to Note 21b. All of these agreements are pledged against the Senior Credit Facility refer to Note 21b.
b. Land-Use Cooperation Agreement
On 4 November 2009, MSW and the Government of Tabalong Regency entered into a land-use cooperation agreement for the cooperation to use 100.2 hectares of land from the Government of Tabalong Regency, located in Mabu’un village, Murung
Pudak Sub-District, Tabalong Regency, in relation to the construction and operation of “Pembangkit Listrik Tenaga Uap” “Coal fired Power Plant” or “PLTU”. The Government of Tabalong Regency will provide the right to use the land, which
subsequently could request to have the land rights for 30 years and this could be extended according to the prevailing law.
As a compensation for land rights, MSW will supply electricity of 1.5 Mega Watts for regency street lighting.
c. Litigation
Dianlia was involved in litigation with Beckkett Pte Ltd “Beckkett” relating to a foreclosure sale of 40 of the shares in Adaro and IBT the “Pledged Shares” by Deutsche Bank AG, Singapore branch “Deutsche Bank” to Dianlia in 2002 following a
default on a loan to a subsidiary of Beckkett in 1998. Beckkett filed a litigation against Deutsche Bank in Singapore for damages alleging, among other things, that Deutsche Bank
failed to obtain the best price for the Pledged Shares according to the foreclosure sale the Suit. In early 2005, Beckkett applied to the Singapore High Court to add Dianlia as an additional defendant to the Suit and sought restoration of the
Pledged Shares or damages if the foreclosure sale was validated.
Adaro Energy Annual Report 2009 195 www.adaro.com
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 557
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009 AND 2008
Expressed in million Rupiah, unless otherwise stated
39. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued c.
Litigation continued
On 21 September 2007, the Singapore High Court rejected all Beckkett’s claims on Dianlia. On 27 April 2009, the Singapore Court of Appeal made its final and binding decision, in favour of Dianlia and found that the purchase of the Pledged Shares
was lawful. The court also ordered Beckkett to pay Dianlia all associated legal costs. However, there is no assurance that Beckkett will not file other claims of a similar nature in the future.
d. Royalty claim
In May 2006, MoEMR alleged that Adaro had underpaid the royalties due from coal sales for th e period from 2001 and demanded payment. Adaro strongly rejected the allegation because it had discharged its obligation to pay such royalties by
way of offsetting it against the Government’s obligation to reimburse Adaro for its VAT payment as prescribed under the CCA. In May 2006, Adaro filed an objection with the Jakarta Administrative Court against MoEMR. Upon Adaro’s application, in May
2006, the Jakarta Administrative Court granted an order restricting MoEMR from taking any further administrative steps on the issue until a final and binding judgment was delivered.
In September 2006, the Jakarta Administrative Court issued a decision in favour of Adaro. The Jakarta High Administrative Court concurred with the Jakarta Administrative Court in February 2007. On 26 September 2008, the Indonesian Supreme
Court concurred with the decision of the Jakarta High Administrative Court and the decision of the Indonesian Supreme Court is final and binding.
In June 2006, MoEMR granted authority to the Committee for State Claim Affairs the “Committee” to pursue alleged underpayment on its behalf. In July 2007, the Committee issued a demand for payment to Adaro. As this is an industry-wide
problem, similar demands have been made by the Committee to other first-generation companies. In September 2007, Adaro filed an objection with the Jakarta Administrative Court against the Committee. Upon Adaro’s
application, in September 2007 the Jakarta Administrative Court granted an order restricting the Committee from taking any further administrative steps on the issue until a final and binding judgment was delivered. On 15 February 2008, the Jakarta
Administrative Court issued a decision in favour of Adaro. The Jakarta High Administrative Court concurred with the Jakarta Admistrative Court on 1 July 2008. On 22 July 2009, the Indonesian Supreme Court concurred with the decision of the Jakarta
High Administrative Court and the decision of the Indonesian Supreme Court is final and binding. On 29 January 2010, the Committee filed a civil review Peninjauan Kembali on the decision of the Indonesian Supreme Court. As at the date of this
report, there is no result yet from the civil review Peninjauan Kembali.
As management believes that Adaro has strong grounds supporting the case and the recent court decision was in favour of Adaro, no provision has been booked to the consolidated financial statements.
e. Capital expenditures
As at 31 December 2009, Adaro has outstanding purchase orders for mining equipments amounting to US68.7 million and SIS for operational equipments amounting to US18.5 million.
f. Banking facility
On 5 September 2007, Adaro entered a bank facility agreement with HSBC to issue a bank guarantee with a total limit of US15,000,000 which includes Standby Documentary Credit amounting to US15,000,000, performance bonds amounting to
US5,000,000 and tender bonds amounting to US5,000,000. This agreement has been amended and extended to 31 July 2010. This facility is not bound by any collateral.
On 20 August 2008, Adaro entered into a banking facility amendment agreement with PT Bank DBS Indonesia for the banking facility in bank guarantee, bid bonds, performance bonds and standby letters of credit, with a total limit of US15,000,000.
This agreement has been amended and extended to 14 July 2010. This facility is not bound by any collateral. The use of certain banking facilities require Adaro to maintain time deposits refer to Note 5.
As at 31 December 2009, the total bank facilities used by Adaro which wer e obtained from HSBC and PT Bank DBS Indonesia and from other financial institutions obtained without any facility in various currencies were equal to US26.4
million 2008: US18.9 million. Those facilities had been issued in relation to sales contracts and reclamation guarantees.
g. Sales commitment
As at 31 December 2009, Adaro had various commitments to deliver 259.8 million metric tonnes of coal to various buyers, subject to price agreement. The coal will be periodically delivered from 2010 until 2022.
