Ex-Im Bank extends Paiton's guarantee
Ex-Im Bank extends Paiton's guarantee
WASHINGTON (Bloomberg): The U.S. Export-Import Bank is adding an extra year to its $540 million political risk guarantee for the construction of power plants by Indonesia's PT Paiton Energy.
Once construction is complete, Paiton, which is 40 percent owned by Edison Mission of the U.S., can tap a 12-year direct loan from Ex-Im Bank to finance the project's operations.
"We are hopeful that Paiton's financial prospects will improve as the project is restructured and Indonesia's economy improves," Ex-Im Bank Chairman James Harmon said in a statement.
Ex-Im Bank said the Asian financial crisis caused "sharp reductions in Indonesia's demand for power and (Paiton's) ability to pay" for loans.
It's giving Paiton until December 2000 to refinance the loan. The original deadline was last October
The project faces additional legal woes. Indonesia's state utility company, PT Perusahaan Listrik Negara (PLN), is suing Paiton to cancel an energy supply contract it said was unlawful, unfair and corrupt.
The Central Jakarta District Court has ruled it has jurisdiction to hear the case and said Paiton will have to pay $600 million if it continues to pursue arbitration against PLN. Paiton's appeal will be heard Jan 19.
The dispute revolves around the contract, signed in 1994, to build the $2.5 billion Paiton-I power plant, the first of a string of 27 independent power-producing contracts Indonesia commissioned. After the rupiah collapsed in value about two years ago, PLN said it was unable to honor the terms of the contracts and paid them at the old rupiah rate.
Edison Mission, a unit of Edison International, the eighth- largest U.S. power producer, has spent more than $300 million on construction of the power plant. Indonesian coal company 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.
Batu Hitam is controlled by Hashim Djojohadikusumo, whose brother is married to Soeharto's daughter.