PLN chiefs resign in protest over govt policy on Paiton
JAKARTA (JP): President of state electricity company PT PLN Adhi Satriya and the company's planning director Hardiv Situmeang tendered their resignations on Monday in protest over the government's handling of its dispute with independent power producer (IPP) PT Paiton Energy.
Both made the decision after hearing that the government would drop the lawsuit filed by the state company in the Central Jakarta District Court and pursue efforts to seek an out-of-court solution to the dispute.
"We have chosen to resign as we disagree with the government's new approach, which we don't think will be effective," Adhi said after meeting with Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie, State Minister of Investment and State Enterprises Development Laksamana Sukardi and Minister of Mines and Energy Susilo Bambang Yudhoyono.
Kwik said the government had accepted the resignation of both executives and would choose replacements.
He refused to elaborate on the government's plan to pursue an out-of-court solution to the dispute.
"Don't ask me. Ask the President (Abdurrahman Wahid)," he said.
The resignation of both executives occurs at a time when both were enjoying success in leading PLN in a legal battle against Paiton in the Central Jakarta District Court. Until the resignation, Hardiv was chief of PLN's team of negotiators in dealing with IPPs, including Paiton.
The Central Jakarta District Court has issued several rulings in favor of PLN.
On Thursday, it ruled that it had jurisdiction to examine the dispute, turning down Paiton's proposition that only an international arbitrator had the right to examine the case.
On Dec. 2, the court issued an injunction to bar Paiton from pursuing its arbitration litigation against PLN, threatening the company with US$600 million in penalties if it failed to comply with the order.
PLN sued Paiton in October this year following months of unproductive negotiations on the change of the terms of their power purchase agreements, particular those regarding the price of the company's power supplies.
PLN demanded the court nullify the contract on the grounds that it had been awarded by its former management in 1994 through corruption, collusion and nepotistic practices.
Paiton, which has built a 1,230 Megawatt (MW) power plant in Probolinggo, East Java, sells its power to PLN at the price of between 5.5 cents and 8.5 cents per kilowatt hour (Kwh).
It 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).
Several legislators expressed strong concerns about the government's new policy on PLN's disputes but praised Adhi and Hardiv's courage in tendering their resignation.
"I salute Adhi for his consistency. But, I am really disappointed by the government's move," chairman of the House of Representatives' Commission VIII for mines and energy Irwan Prayitno told The Jakarta Post.
Legislator Priyo Budi Santoso said he believed the United States Ambassador to Indonesia Robert S Gelbard and Jewish lobbies had pressured the President into dropping PLN's lawsuits against Paiton.
Priyo called on the government to name Gelbard persona non grata and appealed to Kwik, Laksamana and Bambang to resign.
Irwan said the Commission would summon the three ministers for a hearing in the near future.
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. (jsk/03)