EEC and PLN sign interim agreement

EEC and PLN sign interim agreement

PERTH, Australia (Dow Jones): Energy Equity Corp., an Australian power company, said Wednesday it has entered an interim agreement with the Indonesian government over the sale of electricity from Energy Equity's 47.5 percent-owned Sengkang gas and power project in South Sulawesi.

The Australian company had been in dispute with state-owned power company, Perusahaan Listrik Negara, over a U.S. dollar agreement under which PLN is contracted to buy at least 80 percent of the project's power output.

In the wake of the substantial drop in the value of the Indonesian rupiah against the U.S. dollar, PLN's payment requirements rose sharply. In response, PLN only made partial payments.

"A good understanding has been established with PLN for a longer term agreement that will provide certainty for EEC shareholders and continue EEC's commitment to maintaining a long- term power supply to PLN and the people of the economically growing province of south Sulawesi," Energy Equity Managing Director Maurice Brand said in a statement.

Under the interim agreement, PLN has agreed to pay a higher portion of its monthly invoices for the purchase of electricity, so that Sengkang's cash flow now covers all its power plant operating costs, gasfield operating costs and total interest costs of US$14.7 million, Energy Equity said.

The interim agreement will run until definitive agreements are signed or April 30, 2000, whichever is earlier, Energy Equity noted.

The other owners of the Sengkang project are U.S. power company El Paso Energy Corp. with 47.5 percent and Indonesia's PT Trihasra Sarana Jaya Purnama with five percent.

Shares in Energy Equity Corp. rose 1.5 Australian cents to 22.5 cents, in a market that fell 0.8 percent to 2897.8 points Wednesday.