Find Article by Date
Fri, 19 Apr 2002

JP/Court turns down lawsuit against Paiton

Court turns down lawsuit against Paiton

The Jakarta Post, Jakarta

Central Jakarta District Court has dismissed a lawsuit filed by state electricity company PT PLN's labor union against independent power producer PT Paiton Energy and PLN's former president Kuntoro Mangkusubroto.

Paiton confirmed the court ruling, which was issued at the court session on Wednesday.

The court ruled that the labor union was not authorized to bring such action.

"We are pleased with the Central Jakarta District Court's decision. Our view has been that it is for Paiton Energy and PLN to resolve through commercial negotiations the issues concerning the Paiton I project," Paiton president Ronald P. Landry said in a statement.

The lawsuit filed by the labor union in April last year, in which the union charged that the power purchase agreement (PPA) signed by Paiton and PLN in 1994 had violated the Constitution and Law No. 15/1985 on electricity, which stipulates that a PPA should not financially burden the public and the price for power in the PPA should be set in rupiah.

They also said the PPA set too high a price for Paiton's power and inflicted some US$590 million in losses on PLN.

Under the 1994 PPA, the price for power supplies from Paiton was set above 8 U.S. cents per kilowatt hour (Kwh), higher than the price offered by other IPPs, according to the union.

The union also sued Kuntoro on charges of corruption.

Kuntoro, who headed PLN from early 2000 to 2001, withdrew the lawsuit filed by its predecessor Adhi Satrya in 1999 against Paiton. Adhi then sued Paiton to pressure the company to lower its power price.

The union accused Kuntoro of colluding with Paiton.

After years of negotiations, PLN and Paiton last year reached an interim agreement for the new price of Paiton's power. Under the new pricing scheme, PLN will buy Paiton's power at 4.93 cents per Kwh.

Paiton is owned by subsidiaries of Edison Mission Energy of the United States, Mitsui & Co. Ltd. of Japan, General Electric Capital Corporation of the U.S. and local firm PT Batu Hitam Perkasa.