Investor ready to take over OPIC bill from PLN
Investor ready to take over OPIC bill from PLN
JAKARTA (JP): A foreign investor has offered to take over the
Overseas Private Investment Corporation (OPIC)'s US$290 million
insurance claim against state electricity company PT PLN in
return for the operation of two power plants here, according to
the government.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said here on Tuesday the investor wanted to continue the halted
operation of two geothermal plants in Dieng, Central Java, and in
Patuha, West Java. However, he fell short of identifying the
investor.
According to him, the investor has submitted a written
proposal to Coordinating Minister for the Economy Rizal Ramli.
"I've only received a copy of a letter saying that an investor
is interested in taking over OPIC's claim," Purnomo said
following a plenary session of the House of Representatives,
during which he presented an oil and gas bill.
The government agreed earlier to pay OPIC's claim, following
lengthy negotiations between OPIC and PLN.
OPIC issued the insurance claim against PLN to cover $572
million in losses from independent power producer (IPP)
MidAmerican Energy Holding.
The $572 million was compensation MidAmerican should have
received from PLN, as ruled by an arbitration panel in 1999.
Because PLN could not afford to make the compensation payment,
MidAmerican asked that the claim be paid by OPIC, which paid the
company $290 million.
PLN was brought before the arbitration panel because it
refused to pay MidAmerican for power supplies from its Dieng
power plant, and due to the suspension of its Patuha power
project.
It remains unclear whether the claim payment will mean that
MidAmerican must hand over its ownership of the two power
projects to the government.
Purnomo said PLN's restructuring team had yet to meet and
discuss the investor's proposal.
The restructuring team, called the presidential decree 133
team, comprises Rizal, Purnomo, Minister of Foreign Affairs Alwi
Shihab and Minister of Finance Prijadi Praptosuhardjo.
"We must hold another meeting to decide on that matter, while
also discussing other critical issues surrounding PLN," Purnomo
said.
PLN president Kuntoro Mangkusubroto said he had not received a
proposal from the investor.
"I've heard about the foreign investor wanting to take over
OPIC's claim, but I have not seen any proposals so far," Kuntoro
said after a hearing with House Commission VIII for energy and
mineral resources.
He said that PLN was waiting for instructions from the
government on the matter.
Kuntoro also urged the government to finalize plans to
financially restructure PLN.
PLN appealed earlier to the government to take over its short-
term debts, totaling Rp 21.5 trillion (about $2.26 billion).
Rizal rejected the appeal and instead ordered PLN to
reevaluate the value of its assets.
The asset reevaluation should allow PLN to improve its balance
sheet, but the company will have to pay a 10 percent income tax
on the additional revenue.
Because PLN would not gain any real income from the asset
reevaluation, the income tax would only add to its financial
woes.
To date, the government is still unsure whether to exempt PLN
from the income tax on its asset reevaluation.
Kuntoro said if PLN was granted a tax-free asset reevaluation,
the company could cut its net loss to Rp 4.4 trillion this year
from an estimated Rp 20 trillion the previous year.
But if the government agrees to take over its debts without
the asset reevaluation, PLN could book a net profit of Rp 2.5
trillion this year, he said.(bkm)