PLN, govt sued for breaching contracts<\/p>\n
JAKARTA (JP): Giant U.S. power producer CalEnergy Company Inc.
\nhas filed suit in Washington, D.C., against state electricity
\ncompany PLN and the Indonesian government for breaching power
\npurchase contracts.<\/p>\n
CalEnergy Asia president and chief operating officer Donald M.
\nO'Shei Jr. told The Jakarta Post on Thursday the arbitration
\nlawsuit was filed Aug. 14 at the United Nations Commission on
\nInternational Trade Law (UNCITRAL) for failure to pay for power
\nsupplies from its geothermal power plant in Dieng, Central Java,
\nsince the start of operations in March.<\/p>\n
He said monthly power supplies from the plant cost between
\nUS$4.5 million and $5 million.<\/p>\n
He said the Indonesian government was also held responsible
\nfor the payment failure because it guaranteed power purchase
\nagreements (PPA) between PLN and CalEnergy.<\/p>\n
O'Shei said CalEnergy also sued the Indonesia government for
\nsuspending its geothermal power project in Patuha, West Java,
\narguing the PPA did not allow for the action to be taken.<\/p>\n
Although the Patuha project was 30 percent completed, he said,
\nthe company could not carry on with work since bankers halted
\nfund disbursements due to the government's decision.<\/p>\n
"In brief, we want the contracts to be honored," O'Shei said
\non the sidelines of the first national congress of the Indonesian
\nElectric Power Society.<\/p>\n
CalEnergy is the second independent power producer (IPP)
\nseeking arbitration to settle disputes with PLN.<\/p>\n
Another American firm, Florida Power & Lights Co, the majority
\nowner of PT Karaha Bodas Company L.L.C, filed arbitration
\nlitigation against the government in April for postponing its
\ngeothermal power project in Karaha, West Java.<\/p>\n
CalEnergy has three power geothermal power projects located in
\nDieng, Patuha and Bedugul, Bali.<\/p>\n
The 400-Megawatt (MW) Dieng power project is being developed
\nwith Indonesian partner PT Himpurna Enersindo Abadi, a company
\nformed by the military veterans association Himpurna.<\/p>\n
CalEnergy has thus far completed the development of the first
\nunit of the Dieng power plant with a power generation capacity of
\n60 MW.<\/p>\n
It was one of the 10 power projects allowed by the government
\nto continue in a presidential decree issued in September last
\nyear.<\/p>\n
PLN has signed contacts with 26 IPPs. The presidential decree
\nshelved 16 power projects, including Patuha and Bedugul.<\/p>\n
CalEnergy was allowed to continue developing a power unit at
\nthe Patuha power project with generation capacity of 80 MW in
\nNovember last year, but it was suspended again in January this
\nyear.<\/p>\n
The 320-MW Patuha project is being codeveloped by CalEnergy
\nand Indonesia's Mahaka Energy. CalEnergy's local partner for the
\n320-MW Bedugul project is PT Pandanwangi Sekartaji, a subsidiary
\nof the Panutan group.<\/p>\n
CalEnergy secured two syndicated loans worth $560 million,
\narranged by Credit Suisse Boston, to finance the development of
\nthe three power projects.<\/p>\n
O'Shei said the company had invested more than $400 million
\nfor the three geothermal projects so far.<\/p>\n
According to O'Shei, CalEnergy has hired a local attorney,
\nHanafiah & Ponggawa, and the international law firm of Latham
\nWatkins to represent the company in arbitration against PLN. It
\nhas also chosen an arbitrator for the court.<\/p>\n
He said the Indonesian government and PLN had also appointed
\ntheir own lawyers and arbitrator.<\/p>\n
Both arbitrators have yet to choose a third arbitrator to
\njudge the dispute.<\/p>\n
"The arbitration is expected to start in December," O'Shei
\nsaid.<\/p>\n
PLN is experiencing severe financial problems due to the
\nrupiah's fall against the American dollar since the middle of
\nlast year. It receives revenues in rupiah but pays most of its
\noperational costs, including the purchase of power from IPPs, in
\ndollars.<\/p>\n
PLN suffered a net loss of almost Rp 15 trillion ($1.3
\nbillion) in the first half of the year. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-govt-sued-for-breaching-contracts-1447893297",
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"sponsor": "Okusi Associates",
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