Energy Equity believes RI will repay debt

Energy Equity believes RI will repay debt

MELBOURNE (Dow Jones): Australian power company Energy Equity
Corp. said on Monday it believes the Indonesian government will
meet its payment obligations to the company's 47.5 percent-owned
Sengkang gas and power project in south Sulawesi.

Sengkang is in dispute with the government over a U.S. dollar
denominated take-or-pay agreement under which the state power
company, Perusahaan Listrick Negara, is contracted to buy at
least 80 percent of the project's power output.

However in the wake of a substantial drop in the value of the
Indonesian rupiah against the U.S. dollar, PLN's payment
requirements have risen sharply. In response, since March last
year PLN has only made partial payments at a rate of Rp 2,450 for
every U.S. dollar owed, compared to a current exchange rate
around Rp 8,590 to the dollar.

In April Sengkang demanded that the Ministry of Finance honor
its letter of guarantee and cause PLN to discharge its payment
obligations under the terms of the power purchase agreement.

"EEC believes that the loans to and the investment in the
Sengkang Gas and Power Project are fully recoverable and that the
Government of Indonesia through the (Ministry of Finance) will
cause PLN to meet its payment obligations," EEC said in a
statement.

EEC is joined in the project by U.S. power company El Paso
Energy Corp. (EPG) with 47.5 percent and Indonesia's PT Trihasra
Sarana Jaya Prnama with 5 percent.