PLN-Paiton talks may collapse, if no breakthrough made by July 30

Tariff re-negotiations between state electricity company PLN and independent power producer PT Paiton Energi may collapse if no breakthrough is made before July 30, according to PLN?s president Eddie Widiono.

Eddie said in Jakarta on Tuesday the interim agreement which had been signed by PLN and Paition would expire on July 30. ?If the talks fail to reach a breakthrough on the extension of the agreement by the deadline, the status of the two companies? relations will return back to dispute,? he was quoted as saying by Kompas daily on Wednesday.

Eddie said that if the talks were not resumed, PLN would be liable to be taken to an international arbitrage institution by Paiton.

He acknowledged that under the initial agreement, Paiton agreed to reduce selling prices of its power to 5.3 U.S. cents per KWh from 7 U.S. cents as stated in its initial contract.

But PLN still considered the electricity tariff offered by Paiton still too high and it demanded to further cut it to below 5 U.S. cents, he said, adding that PLN would try to save the talks from collapse because Paiton had indicated its good faith to solve the price dispute.

Eddie acknowledged that the tariff decision should be within the level of those reached with other independent power producers PT Amoseas and PT Energy Sengkang, which agreed to cut their tariffs to 4.2 U.S. cents and 4.28 U.S. cents respectively.

He also acknowledged that he condition of Paiton is quite different from those of the two companies.(*)