Court warns Paiton over seeking arbitration<\/p>\n
JAKARTA (JP): The Central Jakarta District Court ordered
\nindependent power producer PT Paiton Energy on Thursday to desist
\nfrom pursuing arbitration against state electricity company PT
\nPLN while examination of the parties' dispute was in progress in
\nthe court.<\/p>\n
The court threatened Paiton with US$600 million in penalties
\nif it did not comply with the ruling.<\/p>\n
It made the provisional ruling at the request of PLN, which
\nsued Paiton following the latter's refusal to renegotiate with
\nthe state company on its power purchase contract.<\/p>\n
"Indeed, we are happy to hear of the ruling. The Central
\nJakarta District Court has made a provisional ruling as requested
\nby PLN, and Paiton has to comply with the ruling," PLN's
\npresident Adhi Satriya said in a statement.<\/p>\n
"This means Paiton is not allowed to make efforts related to
\nthe arbitration process, including appointing the head of the
\narbitration panel."<\/p>\n
Paiton sent a letter to PLN on Oct. 8, 1999, notifying the
\nfirm that it would start the arbitration process against the
\nstate company.<\/p>\n
Paiton made it after the lawsuit was filed by PLN in the
\nCentral Jakarta court.<\/p>\n
In the lawsuit, PLN demanded the court nullify the 30-year
\npower purchase agreement (PPA) awarded by PLN's former management
\nto Paiton in 1994.<\/p>\n
During the news conference on the lawsuit in October, Adhi
\ndescribed the PPA as "unlawful, unfair and not transparent" and
\nsaid the court should declare the contract "void and non
\nenforceable".<\/p>\n
Adhi said the lawsuit was the last resort by PLN after failing
\nto persuade to Paiton to amend the "unfair" terms of the
\ncontract, including reducing the price for its power, during
\nseven months of negotiations.<\/p>\n
Paiton Energy is owned by Japan's Mitsui (32.5 percent),
\nEdison Mission of the United States (40 percent), General
\nElectric, also of the U.S. (12.5 percent) and local firm PT Batu
\nHitam Perkasa (15 percent), controlled by tycoon Hashim
\nDjojohadikusumo.<\/p>\n
The company has developed a 1,230 Megawatt (MW) coal-fired
\npower plant, called Paiton Swasta I, in Probolinggo, East Java.<\/p>\n
Adhi said PLN has enough evidence of corrupt practices
\nconducted in the awarding process of the contract.<\/p>\n
PLN has been seeking to renegotiate all the 27 PPAs signed by
\nits previous management to ease its financial burden caused by
\nthe sharp fall of the rupiah against the dollar.<\/p>\n
Under the PPAs, PLN has to buy power in dollars, but it sells
\nthe power to the public in rupiah.<\/p>\n
Under the PPA, Paiton sells its power to PLN at a price of 8.5
\nU.S. cents per kilowatt hour (kWh) for the first year to sixth
\nyear, with the price to progressively fall to 5.5 cents for the
\n13th to 30th year.<\/p>\n
Adhi said on Thursday PLN was still ready for negotiations
\nwith Paiton, saying that Indonesian law determined that two
\nparties involved in a dispute were still able to settle their
\ndispute out of court if a suit was ongoing.<\/p>\n
The court adjourned the hearing of the lawsuit until Dec. 16
\nto issue a preliminary decision on the demand made by Paiton in
\nthe previous hearing. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/court-warns-paiton-over-seeking-arbitration-1447893297",
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