PLN probes corruption in purchase contracts
JAKARTA (JP): State-owned electricity company PT PLN said on Wednesday it was collecting evidence on corrupt practices allegedly conducted by independent power producers (IPPs) in securing power purchase contracts from the state company.
PLN president Adhi Satriya said PLN would ask courts to annul contracts secured by the IPPs through corrupt practices and to punish all those involved, including former PLN presidents.
He said PLN, together with the Development Finance Comptroller was investigating the alleged corruption, collusion, and nepotism but he did not reveal the time frame for completion of the investigation.
"All people responsible for the awarding of the contracts should be legally accountable for their actions. I myself cannot explain to the public why PLN signed power purchase agreements with considerably marked-up prices
"In the investigation, PLN will not protect anyone involved in the corrupt practices," Adhi said on the sidelines of a meeting on the formation of the company's workers union.
Adhi refused to name PLN's officials considered "responsible" for awarding the power purchase agreements (PPAs).
But PLN data reveals that 10 of the 27 PPA entered into by PLN with IPPs between mid-1992 to early 1995 were signed by PLN's then president Zuhal, currently serving as State Minister of Research and Technology.
The remaining 17 PPA were signed between early 1995 and 1997 by Adhi's predecessor Djiteng Marsudi.
Djiteng has repeatedly said he was "forced" to sign the PPAs under political pressure from those associated with IPPs, mostly former president Soeharto's children and associates.
Djiteng recently said he was ready to reveal evidence of the pressure he experienced in the process to award the contracts.
Adhi made the statement amid a stalemate in negotiations between PLN and several IPPs, including PT Paiton Energy Co. and PT Jawa Power -- developers of the Paiton power plants in Probolinggo, East Java -- on the possibility to reduce their power prices.
Paiton Energy is owned by American companies Mission Energy and General Electric in partnership with Japan's Mitsui and local company PT Batu Hitam Perkasa, which is controlled by business tycoon Hashim Djojohadikusumo.
It is developing two power units, popularly known as Paiton I, with a combined power generating capacity of 1,230 Megawatts (MWs).
PT Jawa Power is owned by Siemens of Germany, PowerGen of Britain and local company PT Bumipertiwi Tatapradipta, controlled by Soeharto's son Bambang Trihatmodjo.
It is developing two power units, popularly known as Paiton II, with a combined power generation capacity of 1,220 MW.
Under the 30-year PPA signed in 1994, PLN must buy power from Paiton Energy at 8.4 U.S. cents per kilo watt per hour (kwh) in the first six years, at 8.2 cents during the next six years, and at 5.4 cents for the remaining 18 years.
PLN signed a 30-year PPA with Jawa Power in 1995 under which the former will buy power from the latter at 6.59 cents per kilowatt hour.
Adhi said based on the international pricing formula a reasonable price for power supplies from the power plants was about 3.5 cents per kwh. He said the estimate took into account the fact that the companies used commercial loans to develop the power plants. (jsk)