Paiton energy dispute<\/p>\n
I write to add my voice to the debate over the Paiton IPP
\naffair. To my mind the two developments that do not assist a
\nsatisfactory resolution to the problem are first the involvement
\nof the Indonesian judicial system and second the resignation of
\nAdhi Satriya and Hardiv Situmeang.<\/p>\n
Like many other contracts involving international parties or
\ninternational finance, the parties agreed to international
\narbitration, so overturning the basic tenets of this contract and
\nplacing them in the hands of Indonesian judicial system did not
\nappear to be the correct move and only served to potentially
\nundermine the confidence of existing and future international
\ninvestors.<\/p>\n
On one hand, even before the collapse of the currency, the
\nprices guaranteed under the power purchase agreement were
\nunrealistically high. Similarly, the sale price of PLN
\nelectricity to consumers was and still is unrealistically low.
\nOn the other hand, a large investment has been made here and
\nthose concerned with making that investment need to not only have
\ntheir capital repaid, but should also enjoy a reasonable level of
\nprofit.<\/p>\n
One also has to remember that if investors have a good power
\npurchase agreement, with high rewards and severe penalties, then
\nthe power plant will be designed to ensure high reliability. By
\ncomparison, many power plants supplied the world over, mainly to
\nstate owned enterprises, are built down to a price rather than up
\nto a quality and soon fall into disrepair. Thus the gulf between
\nthe levels of expectation of both parties is so great that some
\npolitical initiative is necessary. Every element of this whole
\nextremely complex and sensitive issue needs to be examined in
\ngreat detail. Innovative solutions and initiatives are required
\nthat simply cannot be dispensed by judicial processes alone. Some
\nform of negotiation and arbitration is necessary and events have
\nprogressed thus far, that perhaps the new government has quite
\nrightly recognized this and intervened.<\/p>\n
The government has at its disposal many possibilities and
\nlisted here are only a few. It can either wholly or partially buy
\nout the contract (after all the Tanjung Jati case has been
\nresolved in a near similar manner). It can also pass legislation
\nto give tax concessions, facilitate special fuel purchase
\nconcessions (please note, fuel is the single largest component of
\nthe electricity generation cost), or can even decide to disallow
\nthis contract or refer it, either totally or partially, back to
\nthe judicial system after due consideration.<\/p>\n
Perhaps the correct way forward now is for the government to
\naccept the resignation of Adhi Satriya and Hardiv Situmeang and
\nthus removed from other responsibilities, appoint them to a sit
\non a special government committee of inquiry along with other
\nspecially selected individuals, to propose a means of resolution,
\nagree it with the government and then negotiate with the IPP
\nowners.<\/p>\n
EUIS ROSITA WALTER<\/p>\n
President Director<\/p>\n
PT Walter Energitama<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/paiton-energy-dispute-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }