Contracts with IPPs trap PLN into heavy debt problem

The signing of contracts with 27 independent power producers might lead the state electricity company PLN to fall into a trap of heavy debts given the fact that most of the cooperation agreement signed under the contract

The director of the Debt Watch Indonesia, Arimbi Heroeputri, said that the contract agreement with the 27 IPPs could produce potential debts of about US$188 billion to PLN.

"We have found impropriety in the contracts with the private companies. The contracts only give benefits to IPPS," he said, adding that the contracts had been made as a trap for IPPs which are mostly backed by multinational companies.

According to him, the impropriety is among others seen in the fact that the contracts were signed long before the introduction of the electricity law. The other impropriety is also seen in the fact that the fixing of the price of the electricity that will be sold to PLN was made by the IPPs, he added. (*)