Govt won?t issue ?letters of support? to power investors: Minister
Thursday, July 10 2003 - 03:11 AM WIB
Purnomo was quoted by Kompas as saying in Semarang on Wednesday that any investors who want to build power plants in Indonesia in the future and want to cooperate with state electricity firm PT PLN, should deal with the state firm on the business-to-business basis.
The government would not be involved in the deals, he said.
Purnomo noted however investors should not misunderstand the new policy as the government?s reluctance to give comforts to power investors.
The government was still committed to giving a comfortable climate for power investors, which was reflected by the respects given by the government to all power purchase agreements that had been signed by PLN, he said.
Furthermore, the government will raise power charges in the country to reach an economic level so that investors can get profits, he added.
The government issued ?letters of support? to the 27 IPPs who signed power purchase agreements (PPA) with state electricity firm PLN prior to the economic crisis. Under the letters, the government expressed supports for the PPAs.
The letters turned out later to have a serious legal consequence. When the government suspended most of the IPPs? power projects in the wake of the economic crisis, which resulted in PLN?s inability to meet its contractual obligations to the IPPs, some of the IPPs filed arbitration proceedings against PLN and the government and ask for compensation from both of them. The IPPs also held the government responsible for PLN?s failure to comply with the contracts, citing the letters of support. (*)