A DIAMOND DA20-C1 ON A TRAINING FLT AT 3500 FT DECLARED AN EMER DUE LOSS POWER AFTER A POWER ON STALL. AT 1700 FT POWER RECOVERED FOR NORMAL LNDG.

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ENG LOST POWER AFTER POWER ON STALL; SUBSEQUENTLY; EMER DECLARED. ACTING AS CFI; I WAS DOING INITIAL CHKOUT OF ANOTHER CFI IN ACFT. DURING PREFLT I OBSERVED STUDENT TAKE FUEL SAMPLE FROM TANK SUMP DRAIN AND FUEL BOWL DRAIN. TOTAL SAMPLE WAS ONE STANDARD FUEL SAMPLER (APPROX 2 FLUID OUNCES). NO CONTAMINATION FOUND. DURING CHKOUT FLT-TAXI; TKOF; STEEP TURNS; POWER OFF STALLS; AND DUTCH ROLLS-ALL COMPLETED NORMALLY (APPROX 35 MINS). PERFORMED POWER ON DEP STALL WITH FULL POWER (2600 RPM) AND VERY NOSE HIGH ATTITUDE. UPON LEVEL OFF RECOVERY FROM POWER ON STALL; POWER LOSS TO 1300 RPM OCCURRED AND COULD NOT BE INCREASED. EMER CHKLISTS PERFORMED. BEGAN BEST GLIDE TO EMER FIELD WITH PARTIAL POWER. OIL TEMP AND PRESSURE NORMAL; ALL OTHER INDICATIONS NORMAL. ATTEMPTED REDUCING AND INCREASING THROTTLE AND MIXTURE. NO CHANGE; RPM STILL 1300 RPM MAXIMUM. TOTAL GLIDE TIME APPROX 2 MINS; UNTIL 1700 FT MSL. TRIED PUMPING THROTTLE BTWN IDLE AND FULL 3 OR 4 TIMES IN APPROX 2 SECS. POWER RESTORED 2600 RPM. CLBED AND RETURNED TO ARPT FOR NORMAL LNDG. AFTER LNDG; FUEL SAMPLES TAKEN. FIRST 4 FUEL TANK SAMPLES REVEALED WATER CONTAMINATION IN FUEL TANK TOTALING APPROX 2 OZ OF WATER. FUEL CAP FOUND TO NOT SEAL TIGHTLY AND MAY HAVE ACCOUNTED FOR WATER CONTAMINATION ENTRY. CALLBACK CONVERSATION WITH RPTR REVEALED THE FOLLOWING INFO: THE RPTR STATED THE STUDENT ALSO A CERTIFIED FLT INSTRUCTOR SUMPED BOTH TANKS PRIOR TO FLT WITH A 2 OUNCE SAMPLER AND DREW OUT CLR FUEL WITH NO WATER. THE RPTR SAID A NUMBER OF FLT MANEUVERS WERE PERFORMED THE LAST BEING A POWER ON STALL WITH HIGH NOSE UP ATTITUDE AND ON RECOVERY POWER DROPPED TO 1300 RPM. THE RPTR STATED POWER WAS RECOVERED AT 1700 FT AND A NORMAL LNDG WAS ACCOMPLISHED. THE RPTR SAID MAINT BELIEVES THE FAILURE WAS CAUSED BY FUEL CONTAMINATION AS AFTER LNDG FUEL SAMPLES FROM THE SUMPS WERE PURE DIRTY WATER WITH DIRT PARTICLES. THE RPTR STATED IT IS SUSPECTED THE FUEL SUMP LOCATIONS MAY BE INCORRECT AND NOT AT THE TANK LOW POINT WHERE WATER AND DIRT WOULD ACCUMULATE.