PLN labor union sues PLN, Paiton for causing the suffering of the people
Tuesday, May 1 2001 - 04:30 AM WIB
A labor union at state owned electricity company PT Perusahaan Listrik Negara (PLN) has sued the company and its partner PT Paiton Energy Company (PEC) for their unfair electricity purchase agreement, that is likely to cause the suffering of the people in the next 30 years, Media Indonesia reported on Tuesday.
The PLN labor union, through its lawyer Fauzie Yusuf Hasibuan, also sued Kuntoro Mangkusubroto as former minister of mines and energy and former PLN president for his contribution in the signing of that agreement that the union considered to be unfair to the people.
The union demanded that PLN and Paiton canceled their power purchase agreement (PPA) that was signed on Feb. 12, 1994.
Based on the agreement, the union said, the value of Paiton project in Paiton, East Java, was marked up drastically to US$2.5 billion, and PLN agreed to buy electricity produced by Paiton at 8.50 U.S. cents per kilowatt per hour (kWh) for a 30-year period.
The union contended that the agreement is unfair to PLN and the people, as PLN sells its electricity at only 2.79 U.S. cents per kWh, and therefore, PLN has to subsidize Paiton by 5.77 cents per kWh of electricity.
Fauzi noted that the agreement had violated Presidential Decree No. 37/1992 on the business of private electricity. The decree stipulates clearly that all prices of electricity must be quoted in rupiah and set in the agreement. But the PPA signed by PLN and Paiton quotes electricity prices in U.S. dollar.
He added that the PPA agreement also violated Law No. 15/1985 on electricity, especially articles 7 verse 2, article 1 verse 6 and article 3. Those articles stipulate that the provision of private electricity must encourage economic development and improve the welfare of the people, and most of all may not be against the interests of the state. (*)