Jakarta court puts an end to Paiton lawsuit
JAKARTA (JP): The Central Jakarta District Court decided on Thursday to end the legal process of the dispute between state- owned electricity company PT PLN and independent power producer PT Paiton Energy at the request of the state company.
"We have submitted a mandate from PLN to revoke the lawsuit that we had filed against Paiton in court. The panel of judges approved our request at today's hearing," Maqdir Ismail of Adnan Buyung Nasution & Partners law firm told The Jakarta Post.
Maqdir said the court's decision automatically annuls all previous provisional rulings made by the court, including the one that barred Paiton from pursuing arbitration litigation against the state company.
Maqdir called on Paiton to reciprocate PLN's move by also dropping its arbitration litigation.
"To be fair, Paiton also has to put an end to its arbitration efforts. Thus far, we have not yet heard if Paiton has made such a move," Maqdir said.
Paiton lawyer Frans Hendra Winarta told the Post Paiton had notified new PLN president Kuntoro Mangkusubroto that it was committed to seek a commercial solution to their dispute and would thus terminate its arbitration efforts.
"Paiton notified the new PLN leadership about its plan to drop the arbitration lawsuit several days ago. I have copies of the letter. But for the sake of confidentiality, I can't give them to you," Frans said.
"The arbitration suit will undermine the commercial negotiations that Paiton is committed to do with PLN," Frans said.
Frans also reiterated Paiton's commitment to cut the price of its power supplies to PLN.
PLN filed a lawsuit against Paiton in October last year following months of unproductive negotiations on changes to the power purchase agreement (PPA) which was signed in 1994.
PLN asked the court to nullify the contract, saying it was void ab initio (void from the beginning), invalid and based on the corruption, collusion and nepotism practices associated with the administration of former president Soeharto.
It said the high price for Paiton's power supplies set in the contract reflected the corrupt practices.
Paiton Energy is owned by Japan's Mitsui (32.5 percent), Edison Mission of the United States (40 percent), General Electric, also of the U.S. (12.5 percent) and local firm PT Batu Hitam Perkasa (15 percent), which is controlled by tycoon Hashim Djojohadikusumo.
The company developed a 1,230 Megawatt (MW) coal-fired power plant, called Paiton Swasta I, in Probolinggo, East Java.
Under the contract, Paiton sells its power to PLN at the price of between 5.5 cents and 8.5 cents per kilowatt hour (Kwh), which is higher than the average price of 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).
Paiton filed an arbitration suit in Stockholm soon after PLN filed its suit in the Central Jakarta court, but delayed the arbitration efforts after the court ordered it to stop pursuing them.
President Abdurrahman Wahid ordered PLN to drop the arbitration suit this month, insisting that his administration would honor Paiton's contract and all other contracts made by previous governments.
The President said he preferred an out-of-court negotiation to change the contents of the contracts rather than reaching a legal solution.
Then president of PLN Adhi Satriya resigned in protest over Abdurrahman's policy. He was then replaced by former mines and energy minister Kuntoro Mangkusubroto. (jsk)