Edison finds no payoffs in winning RI contract

Edison finds no payoffs in winning RI contract

ROSEMEAD, California (Bloomberg): Edison International,
California's second-largest utility, said on Thursday a company
investigation found no improper payments were made to Indonesian
government officials to win a sales contract for a US$2.5 billion
power-plant project.

The Rosemead, California-based company hired a law firm to
interview employees of Edison Mission Energy, its power-plant
development unit, to investigate charges of corruption and
excessive electricity prices in the Paiton project, the Wall
Street Journal reported, citing people familiar with the inquiry.

Edison Mission signed a contract in 1994 to sell power from
the plant, which is still under construction, to Indonesia's
government-owned utility at rates now under scrutiny because of
the country's economic slump.

"A review of these allegations has found no improper payments
made to any official of the Indonesian government in connection
with the Paiton project by either Edison Mission Energy or by any
other owner developer of the project," Edison International said
in a statement.

Former President Soeharto resigned last May after 32 years of
ruling Indonesia, amid charges of corruption.

Less than a month later, state-run utility PT Perusahaan
Listrik Negara (PLN) said the contract to buy power from Edison
Mission set prices too high and was signed under pressure from
Soeharto.

Soeharto is under investigation for allegedly amassing
billions of dollars through illegal contract awards.

Edison never felt pressured to give special favors to Soeharto
or his family members and associates to get the contract signed,
Edison Mission President Edward Muller said.

"I met Soeharto for the first time on the day we signed the
contract," Muller said. "The only pressure that I felt was to
drop the price."

Cancellations

In June, PLN canceled contracts to buy power from a company
owned by Soeharto's daughter and a unit of El Paso Energy Corp.,
and from a company owned in part by Unocal Corp.

MidAmerican Energy Holding Co., formerly CalEnergy Co., said
in December that it has entered arbitration after the Indonesian
government stopped making payments on a similar power-sales
contract.

CalEnergy took an $87 million charge in the fourth quarter of
1997 to write off Indonesian investments not covered by
insurance.

Edison Mission owns 40 percent of the Paiton project and has
spent $300 million on construction. Indonesia's PT Batu Hitam
Perkasa owns 15 percent, a unit of General Electric Co. owns 12.5
percent and Japan's Mitsui & Co. owns 32.5 percent.

Edison doesn't expect to take a charge for its investments in
Indonesia, and any future profits from the plant haven't been
included in earnings estimates, analysts said.

"We're not expecting any meaningful contribution from
Indonesia," said Credit Suisse First Boston analyst Paul
Patterson, who has a "hold" rating on Edison International. "Any
returns on that project will be an unexpected plus."

Edison International shares fell 1/8 to 25 5/8.