Gus Dur derides Paiton deal, but vows to honor it
Gus Dur derides Paiton deal, but vows to honor it
JAKARTA (JP): President Abdurrahman Wahid described on
Wednesday the power purchase contract signed by state electricity
company PLN and PT Paiton Energy as full of nonsense but he said
the government would honor it.
"The power tariff scheme (in Paiton's contract) is entirely
gombal (rubbish) and was produced by the corrupt old regime. But,
like or dislike it, we have to honor it," the President, who is
popularly called Gus Dur, said during a media conference at the
Bina Graha presidential office.
Abdurrahman said while honoring the contract, the government
would renegotiate the contractual terms to protect the interests
of the public.
He said he preferred to solve the dispute over the contract
out of court rather than a legal solution because the latter
could harm the government's efforts to attract foreign
investments.
"Our policy is to attract foreign investment. As such, we have
to see the case from a broad perspective rather than a narrow
electricity perspective," the President said.
PLN filed a lawsuit in October this year at the Central
Jakarta District Court to annul Paiton's power purchase agreement
(PPA), claiming the contract contained unfair terms.
PLN has had some success in the trial but the government
decided to drop PLN's lawsuit on Monday.
The move prompted the resignation of PLN president Adhi
Satriya and the company's planning director Hardiv Situmeang.
Abdurrahman likened the Paiton contract to the independence
gained by East Timorese following the self-determination ballot
supervised by the United Nations in August this year.
"We accepted the political contract whether or not we wanted
to see East Timor become independent," Gus Dur said, terming the
ballot a "political contract".
He again dismissed allegations that he had bowed to foreign
pressure in dropping PLN's lawsuit.
Separately, the assistant to the state minister of investment
and state enterprise development, Sofyan Djalil, said in a
seminar on investment that the government did not rule out the
possibility of refiling the lawsuit against Paiton in the future
if the renegotiation efforts bore no fruit.
Sofyan said PLN's lawsuit would hamper the image of Indonesia
from an investor point of view.
"Our problem now is that foreign investors don't trust our
judicial system," Sofyan said, adding that this was the reason
foreign investors preferred arbitration to settling a contract
dispute.
He said the government would expect a concession from Paiton
now that it had dropped PLN's lawsuit.
"The government has made a very unpopular decision to show
that we're serious about our commitment to foreign investors," he
said.
PLN had been complaining that under the PPA, Paiton's
electricity was too expensive compared to international
standards, suspecting that Paiton had marked the cost of its
power project in Paiton village, Probolinggo, East Java.
Paiton is owned by Japan's Mitsui, General Electrics of the
United States and local company PT Batu Hitam Perkasa. Paiton has
built a US$2.4 billion coal-fired power plant with a power
generation capacity of 1,230 Megawatts.
Sofyan also defended the United States Ambassador Robert S.
Gelbard for lobbying the Indonesian government.
"It's normal for ambassadors to lobby for the interest of
their nations, because that's what all ambassadors have to do,"
he said.
Michael Owens, the U.S. embassy's deputy chief of mission,
said at the seminar Gelbard had only expressed the view of the
American government that Indonesia had to treat foreign investors
fairly.
"Foreign investors will shy away from the (Indonesian)
economy if existing investors are not being dealt with fairly,"
Owens said in his speech at the forum.
Meanwhile, Harvey Goldstein, president of PT Harvest
International Indonesia agreed that the decision to drop PLN's
lawsuit was hard to accept. However, the move was welcomed by the
international investment community.
"This issue does not only affect PLN, but the whole country,"
he said. (03/prb)