Kuntoro denies PLN to opt for force majeure
Kuntoro denies PLN to opt for force majeure
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto denied on Tuesday that state electricity company PT
PLN plans to declare force majeure in contracts with its
independent power producers (IPP).
Kuntoro said the cross-ministerial team formed on Sept. 11 by
President B.J. Habibie to restructure and rehabilitate PLN had
not yet finished formulating a common approach to settling the
dispute between PLN and 26 IPPs with which it has signed power
purchase agreements (PPA).
"Hopefully, (we can finish formulating the approach) in two
weeks," Kuntoro said after delivering a speech at a business
luncheon here.
The cross-ministerial team is headed by Coordinating Minister
for Development Supervision and State Administrative Reforms
Hartarto Hadisoemarto. Kuntoro heads the subcommittee responsible
for renegotiating PLN's contracts.
Earlier, PLN president Adhi Satriya was quoted by The Jakarta
Post as saying last week that PLN planned to issue the 26 IPPs
with force majeure notices given the companies financial
problems.
However, when answering a question raised during the business
luncheon, Kuntoro said Adhi's tongue must have slipped, or that
he had been misinterpreted by the press.
When asked if the cross-ministerial team would rule out the
force majeure option in dealing with IPPs, Kuntoro said, "I can't
make any statement on that because all measures (in dealing with
IPPs) should first be agreed upon the other ministers in the
team."
In a related development, PLN's spokesman Maryono said in a
press release that Adhi had not yet declared force majeure in the
companies contracts with IPPs.
"For the moment, PLN is carefully studying the power purchase
agreements that have been signed to find out if the current
monetary crisis could be considered to be a force majeure. The
study is being conducted by lawyers hired by PLN," Adhi was
quoted by Maryono as saying.
"The legal opinion that will be given by the lawyers should be
generally applicable," he added.
He said that a force majeure claim would only be valid if both
parties tied in contract agreed upon the claim. If one party
disagreed with the claim, the case would have to be taken to
court.
PLN has received a force majeure claim from Hong Kong-based
IPP Hopewell in relation to its 1,320 Megawatt (MW) coal fired
Tanjung Jati B (TJB) power plant project in Central Java.
The claim provides the basis for Hopewell to suspend
development of the US$1.7 billion power plant.
"The background to this notice is that current circumstances
in Indonesia have led to a loss of confidence amongst financiers
and potential financiers of the project," Hopewell chairman
Gordon Wu said.
Adhi said PLN is studying the claim and has yet to make any
response.
Analysts have long urged PLN to declare force majeure in its
contracts with IPPs, but the company is reluctant to do so for
several reasons.
Most contracts with independent power producers include a
force majeure which covers the IPP's interests, but not a
reciprocal clause regarding PLN's interests.
The 26 independent power producers are mostly joint ventures
formed between international power companies and the children and
cronies of former president Soeharto. Most contracts were awarded
without a competitive tender. (jsk)