Govt to take action over alleged KKN in Paiton deal
Govt to take action over alleged KKN in Paiton deal
JAKARTA (JP): The government will pursue legal processes
against PT Paiton Energy over alleged corruption in its power
purchase contract, but will seek to reach an out-of-court
compromise on the commercial aspects of the contract, a senior
minister said on Thursday.
Coordinating Minister for the Economy, Finance and Industry
Kwik Kian Gie said the government would punish anyone involved in
the alleged corruption, collusive and nepotistic (KKN) practices
during the preparation and awarding of the contract.
"As far as foreigners are concerned, if (the court rules that)
the corruption involved American businessmen, then the American
government will certainly arrest them based on their antiforeign
corruption act," Kwik said in a press conference.
Aside from launching the litigation, Kwik said the government
would renegotiate the terms of the contract with Paiton.
"We have to clearly differentiate the KKN practices that have
given birth to the contract -- which are criminal in nature --
from the commercial aspects of the contract," Kwik said.
Paiton is a joint venture between Japan's Mitsui (32.5
percent), General Electric (12.5 percent) and Edison Mission
Energy (40 percent) of the United States and local company PT
Batu Hitam Perkasa (15 percent)
PLN filed a lawsuit last October to annul Paiton's power
purchase agreement (PPA), claiming the contract contained unfair
terms and traces of corruption.
But President Abdurrahman Wahid, in an unexpected move,
dropped PLN's lawsuit on Monday and said the government would
seek an out-of-court solution to the dispute with a negotiation
team led by ministers.
President Abdurrahman Wahid's decision to drop the lawsuit
prompted the resignation of PLN's president Adhi Satriya and the
company's planning director Hardiv Situmeang.
Kwik explained PLN's lawsuit had mixed commercial matters with
the criminal aspects of Paiton's contracts.
He said PLN's legal action was in conflict with Abdurrahman's
basic policies which prioritize "friendship" over dispute.
"The legal action, which implies confrontation, could disturb
our good relations with other countries," he said, adding that an
out-of-court negotiation was better than a legal solution.
He said the government would renegotiate Paiton's power
purchase contract for the purpose of reducing the price of its
power supplies and to reschedule payments in accordance with the
government's financial capability.
"Prices must absolutely go down," he said.
Under the contract signed by Paiton and PLN in 1994, Paiton
sells power to PLN at the price of between 5.5 U.S. cents to 8.5
cents per kilowatt hour (kWh), which is higher than the average
6.4 cents per kWh set by other independent power producers and
much higher than PLN's selling price of Rp 240 (about 3 cents).
PLN accused Paiton of marking up the cost of its power project
by around $1 billion to $2.5 billion which consequently caused
the price of its power to be unreasonably high.
State Minister of Investment/State Enterprises Laksmana
Sukardi said the government would form a team of negotiators
comprising of PLN's officials and professionals to negotiate with
Paiton.
The team would be supervised by a ministerial team, including
Laksamana, Kwik and mines and energy minister Susilo Bambang
Yudhoyono, formed by the President.
Separately PLN's lawyer Adnan Buyung Nasution criticized the
government's decision to drop PLN's lawsuit, describing it as an
interference in the legal process.
However, he said he appreciated the decision but advised the
government to continue the legal process on the criminal aspects
of Paiton's contract. (03)