Indonesia mulls taking power dispute to court
Tuesday, November 14 2000 - 03:00 AM WIB
Chief economics minister Rizal Ramli said yesterday the government may take its controversial power dispute with a number of independent power producers to court, particularly those who choose not to be cooperative in the settlement process.
"This is different from the previous policy, in which an out-of-court settlement was used. We are now examining options to take these cases to court," Ramli said on the sidelines of a seminar titled "Trends in Mergers and Acquisitions in Indonesia," in Jakarta.
State electricity company PT Perusahaan Listrik Negara (PLN) has been forced to shoulder major debt burdens due to unfavorable contracts signed during the corrupt Soeharto regime.
Ramli's statement indicated that the government has lost its patience in its negotiations with private power producers.
Ramli did not name the companies that are not 'cooperative'.
Last year the government decided to drop a lawsuit filed by PT PLN against PT Paiton Energy Company over an unfavorable, shady power purchase agreement.
PLN wanted to revise the agreement, under which PLN must buy electricity at a price much higher than that on the international market.
The private power projects are accused of massive corruption and markup practices.
According to former PLN President Director Adhi Satriya, the value of the Paiton I project, for instance, was marked up by more than 100%. The price of its output, 8.5 US cent per kWh, was also twice as mush as the international price.
President Abdurrahman Wahid, who prefers an out-of-court settlement, then replaced Satriya with former mines and energy minister Kuntoro Mangkusubroto, because Satriya rejected Wahid's policy.
Ramli said the government will offer incentives to private power producers who want to cooperate with the government.
"But if they refuse to cooperate, we will make them 'busy'. We need their goodwill," he said without elaborating.
Ramli also urged PLN to be tougher in negotiating with the independent power producers.
"Negotiations must not only focus on the reduction of the electricity price from 7 US cents to 3 US cents. Lowering the price is easy," said Ramli.
The chief economics minister said PLN should also press ahead with its efforts to value the electricity projects properly, because some of the projects have been marked up by more than 100%.
He said PLN must involve the company's commissioners in negotiating with its business partners, particularly in attempts to resolve the dispute.
"It seems that the PLN commissioners have all been sleeping," he said. (*)