Private electricity claims total $20 billion

Minister of Finance Bambang Sudibyo said that all claims from independent power producers (IPPs) against the government, if all accepted by the government, could reach US$20 billion, of which $514 million is due this year.

However, Bambang said that the government would avoid that huge debt becoming the government's debt, and therefore, it was now negotiating with IPPs to minimize the possibility of that debt becoming sovereign debt.

Speaking at a hearing between the government's team on electricity and the House of Representatives' Commission VIII for mines and energy affairs, Bambang explained that US$ 514 million claims that comes due this year include $296.5 million claims from IPPs for their electricity that the government and state electricity firm PLN promised to buy based on interim agreement that both parties had signed.

The other $217.5 million is claim from Overseas Private Investment Corp. (OPIC), a U.S. federal insurance firm that guarantees U.S. investment overseas. OPIC actually asked the Indonesian government last March to pay US$290 in compensation claim that it had paid to California Energy/Mid American Energy Holding.

An international arbitration ordered state electricity company PLN and the government to pay $290 million to the two U.S. energy investors for the former's decision to cancel the latter's energy projects in Indonesia, Patuha and Dieng.

However, Bambang said that his office had not yet received a claim from OPIC, and therefore, the government had not yet allocated any fund for OPIC.

Bambang added that currently the government and OPIC representatives were having a negotiation in Jakarta.

At the hearing, the commission also questioned the team on the cancellation of the Klaten-Tasikmalaya electricity transmission tender that was won by PT Bukaka Teknik Utama.

Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie as the team leader explained that the team decided to revoke the tender result after receiving a report from one of the committee members that Bukaka used to neglect a big project in the past. Besides, Bukaka could not meet financial and technical requirements.

But Kwik refused to name the person who reported the case to the committee, and he said he - as the committee chairman - was ready to take responsibility, even though he had to fight in the court.

In the hearing, Kwik was accompanied by Finance Minister Bambang, Minister of Mines and Energy Susilo Bambang Yudhoyono, Foreign Minister Alwi Shihab, State Minister of Investment and State Enterprises Development Rozy Munir and the National Development Planning Board chairman Djunaidi.

After hearing the explanation, the commission then decided to form a working team to monitor development in the negotiations between the government/PLN and IPPs over private electricity issues. The team would also probe the cancellation of the transmission tender. (*)