PLN labor union will not drop its legal suit against Paiton and others
Tuesday, May 15 2001 - 04:00 AM WIB
State electricity company PT PLN labor union will not back down from its legal suit against Paiton Energy Company (PEC) and other parties responsible for the implementation of power purchase agreement (PPA) between PEC and PLN that the union considers to be left-sided.
PLN labor union lawyer Fauzi Yusuf Hasibuan told the Central Jakarta District Court on Monday (May 14) that one of the plaintiffs had expressed uneasiness with the suit and demanded the union to drop the suit.
"It is not ethical to disclose here who or which party that demanded PLN labor union to drop the case because the demand is neglected by the union," Fauzi said.
In the case, PLN labor union sued PLN, Paiton, minister of energy and mineral resources and former PLN president Kuntoro Mangkusubroto, that the union considered to be responsible for the implementation of the PPA.
But Fauzi said that the union would not drop the suit just like PLN did in 1999. He revealed that PLN actually filed similar suit against Paiton in Oct. 1999. However, PLN withdrew the legal suit and pursued bilateral negotiation with Paiton that resulted in an interim agreement on Feb 21, 2000.
Fauzi contended that the interim agreement did not solve the problem as the problem lied with the PPA that signed by PLN and Paiton on Feb. 24, 1994. The union in its suit demanded the court to cancel the PPA because it would potentially inflict losses to PLN and eventually burden Indonesian people.
He contended that the value of the Paiton I project had been marked up almost twice to US$2.5 billion, resulting in a high selling price of Paiton electricity to PLN at 8.5 cents per kilowatt per hour (kWh), while PLN sells its electricity at 2.9 cents per kWh.
Thus, if the PPA is not canceled and enforced for 30 years, as stipulated in the agreement, it will burden PLN 5.77 cents per kWh all the way for 30 years period. This will make PLN practically bankrupt.
Therefore, Fauzi said the union demanded the court to cancel the agreement as it was against the prevailing ruling, especially Presidential Decree No. 37/1992 that requires all pricing in electricity contracts be stated in Indonesian rupiah.
In addition, the PPA is also against Law No. 15/1985 on electricity that stipulates the provision of private electricity should be pursued for the best interest of the people, and not burdening the people. (*)