Paiton deal may improve investor confidence

Paiton deal may improve investor confidence

The Jakarta Post, Washington

U.S.-ASEAN Business Council president Ernest Z. Bower says the
successful debt restructuring of power producer PT Paiton Energy
will send a positive signal to foreign investors in the country.

"The treatment of existing investors is crucial to Indonesia's
ability to attract future investment," Bower said in a statement
issued on Wednesday.

"Indonesia has taken proactive steps to address its long-
standing energy supply problems, which gives investors and
markets greater confidence as a result. The importance of this
settlement cannot be overstated."

Bower said the deal would provide fresh momentum for U.S.-
Indonesia bilateral energy talks, which have not been held for
several years.

The restructuring deal was announced last week.

As part of the debt restructuring, the Export Import Bank of
the United States (USEXIM) would provide a US$381 million direct
loan to Paiton's power project.

USEXIM, along with the Japanese Bank for International
Cooperation, Nippon Export and Investment Insurance of Japan and
the U.S, Overseas Private Investment Cooperation, are the major
lenders to the project.

In addition, commercial banks from the U.S., Europe, Japan,
Australia and other Asian countries and bond holders also
contribute to the project.

Paiton, which is a joint-venture company principally owned by
Edison Mission Energy, GE Capital and Mitsui & Co., owns and
operates a 1,230 megawatt coal-fired power plant in East Java,
the largest independent power project in Indonesia. The company
will sell its power to state electricity firm PLN.

Financing for the Paiton power project was completed in 1995
and the plant was commissioned four years later.

However, the Asian financial crisis has forced the Indonesian
government to seek renegotiation of the original power purchase
agreement.

In 2002, Paiton and PLN agreed to an amended power purchase
agreement.

The U.S.-ASEAN Business Council is the U.S.'s leading private
business organization dedicated to promoting increased trade and
investment between the U.S. and members of the Association of
South East Asian Nations (ASEAN).

The council membership includes around 150 of the Fortune 1000
American companies with trade and investment interests in the
ASEAN region.