PLN told to pay Rp 46.6 billion to Enico

The Supreme Court (MA) has told state electricity company PT Perusahaan Listrik Negara (PLN) to pay a total of Rp 46.6 billion to PT Enico National Development over their disputes on the ass valley (ash disposal work) project for Suralaya steam-powered power plant in West Java.

Through an instruction issued by Supreme Court deputy chairman Drs. H. Taufik, SH, MH No. WKMA/019/I/2001, dated Jan. 15, PLN is faulted in the dispute with Enico over the ass valley project that was financed by the 1989/1990 state budget, and therefore, PLN has to pay a total of Rp 46.6 billion to Enico.

According to PLN president Kuntoro Mangkusubroto, when PLN and Enico were engaged in disputes, Enico then sued PLN in the North Jakarta District Court and won the case. But PLN appealed the decision and won the case in the Jakarta High Court and also in the Supreme Court. And the Supreme Court at that time ordered PLN to pay Enico Rp 700 million for the compensation of its ass valley works.

However, in 1997 the Supreme Court issued a review decision over the case and faulted PLN in the dispute and required the state electricity company to pay Rp 2.1 billion to Enico, plus compound interest of 3 percent per annum since 1991, bringing a total of Rp 44.1 billion at the end of 1999. In addition, PLN was still required to pay distress money of Rp 500,000 per day to Enico since April 29,1998, bringing the total that PLN had to pay to Rp 46.6 billion.

Because of that review decision, PLN's accounts used to be blocked by authorities, and Rp 2 billion of its money had been transferred to the account of the North Jakarta District Court.

According to PLN's legal staff M Yunan Lubis SH, Chief Justice Sarwata had given his opinion about the case, and he considered the decision over the ass valley project as illogical because it involved compound interest that was not recognized in any civil case.

As the review decision was the final step in a legal process, PLN could only asked the Supreme Court to delay the execution of the decision. And the Supreme Court approved PLN's request through Chief Justice letters No. KMA/402/XII/1998 and No. KMA/545/VI/1999.

At the same time, PLN filed a law suit against Enico at the North Jakarta District Court, arguing that Enico should have named the government, not PLN, in the ash valley dispute. And PLN won the case. When Enico appealed the decision to the higher court, PLN still won the case at the Jakarta High Court. The case now is at the hand of the Supreme Court.

However, the instruction issued by MA deputy chairman Drs. H. Taufik, SH, MH no. WKMA/019/I/2001 dashed PLN's hopes because in the instruction letter, Taufik stated that it was PLN, not the government, that engaged in dispute with Enico.

"If this really happens, it means that we cannot expect the Supreme Court as the pillar of justice," Yunan said.

This serves as a severe blow to PLN after the state electricity company was required to pay US$15 million to Multilateral Investment Guarantee Agency (MIGA), an insurance arm of the World Bank, for the cancellation of Pasuruan power plant in East Java.

With these cases, PLN would continue to wallow in a mud-hole as its finance continued to be in the red. Last year, PLN suffered a net loss of Rp 22.55 trillion, increasing 98 percent from Rp 11.37 trillion recorded in 1999.

According to PLN finance director Parno Isworo, most of last year's losses were contributed by its debt burden payment, totaling Rp 12.46 trillion. "The Ministry of Finance penalized us for being late in paying two-step loans."

He also said that PLN's burden of buying private electricity also soared last year to Rp 10.89 trillion, from Rp 5 trillion in 1999. Besides, the government did not disburse electricity subsidy of Rp 3.9 trillion to PLN last year.

Parno said, this year, PLN's finance would continue to be in the red. He predicted that PLN would suffer net losses of around Rp 9 trillion, at the rupiah exchange rate of Rp 7,000 per U.S. dollar. "But if PLN's restructuring could be completed, and the government pays the electricity subsidy of Rp 4.1 trillion, PLN's net losses for this year will likely drop to Rp 4.42 trillion." (*)