PLN told not to sign interim agreement with Paiton

State electricity company PT PLN labor union (SP PLN) has called on PLN not to sign a new interim agreement with Paiton Energy Company (PEC), that would only burden PLN even more as PEC would likely demand higher payment for its electricity.

SP PLN chairman Hasrin Hutabarat said the current interim agreement between PLN and PEC would end on June 30, 2001, and which PLN is required to pay PEC US$17 million a month or a total of US$108 million for the six month period of January-June 2001.

That payment is to purchase electricity produced by PEC's power plant in Paiton, East Java. Whether PLN uses the electricity or not, PLN is required to pay a fixed monthly payment of $17 million.

If PLN opens the possibility to sign a new interim agreement, Hasrin said, Paiton would demand an increase of payment from PLN up to US$20 million a month.

SP PLN is currently suing PLN, PEC and other parties for the signing of power purchase agreement (PPA) between PLN and PEC that burdens PLN and forces PLN to suffer.

The lawyer for SP PLN, Fauzie Yusuf Hasibuan, called on PLN directors not to sign the new interim agreement with PEC until the court gave its final verdict to SP PLN's lawsuit.

"SP PLN wins the case, thus the power purchase agreement and also its derivative products such as interim agreement would automatically become void," he said.

Fauzie warned that PLN would continue to suffer losses if it went ahead with signing the new interim agreement, as it would be required to pay PEC in dollar terms, while it sold its electricity in rupiah.

PLN, that booked a net profit of Rp 1.2 trillion in 1996, has been suffering losses since 1997, when the company's net loss reached Rp 600 billion. PLN continued to book a net loss of Rp 9.2 trillion in 1998, Rp 11.4 trillion in 1999 and RP 23.4 trillion in 2000. (*)