PLN will honor existing electricity contracts

State owned electricity company PLN has ensured investors that it will continue to honor the existing contracts despite the recent revocation of the Electricity Law no 20/2002 by the constitutional court, Media Indonesia reported on Friday.

"All the existing contracts signed by PLN will not be affected by the revocation of the law and that the revocation of the electricity law will not also become a triggering event for renegotiations (of contract)," PLN's president Eddie Widiono said in Jakarta on Thursday.

Eddie acknowledged that a number of electricity contracts were signed by PLN after the enforcement of the law in Sept. 23, 2003. These contracts covers a wide range of activities including procurement of goods and services, and partnership with independent power providers.

He acknowledged that the revocation of the law was not expected because the law had been implemented in almost all aspects of PLN's business activities including its corporate restructuring program

The constitution court, last week, revoked the Electricity Law No 20/2002 on the ground that it was not based on the 1945 constitution, which states that the electricity should be managed for the entire interest of the people.

As the consequence of the revocation, all the electricity regulations issued by the government as part of the implementation of the law were no longer valid. But Eddie insisted that unlike such regulations, the contracts that had been signed by PLN since the enactment of the law remained valid. (*)