PLN union files suit against PT Paiton

PLN union files suit against PT Paiton

JAKARTA (JP): The trade union representing workers of state
electricity company PLN filed a civil lawsuit on Tuesday against
its management and privately run power plant operator PT Paiton
Energy over an allegedly flawed power purchase agreement.

The union's chairman, Hasrin Hutabarat, said the 1994
agreement violated the law and inflicted some US$590 million in
losses to PLN due to the price margin between power offered by PT
Paiton and the consumer price.

According to the agreement dated Feb. 12, 1994, PLN had to buy
power from the Paiton I hydrothermal electricity plant in East
Java for U.S. 8 cents/kWh, double the price offered by other
private plants in Central Java.

Under the same agreement it was decided that Paiton would be
transferred to PLN ownership after a set period of time.

However, following the economic collapse, the dollar-dominated
contract became too financially burdensome.

In 1997 the dollar was worth Rp 2,400 but the economic crisis
saw the rupiah depreciate drastically. Today, the dollar is worth
approximately Rp 10,000.

Claiming to represent all the company's workers, Hutabarat
said the agreement had sparked "an antagonistic atmosphere" in
the state company and had forced the public to pay high power
costs.

"We filed a lawsuit with the Central Jakarta District Court
today, urging the judges to annul the agreement because it may
cause greater losses to PLN and force consumers to pay higher
prices," he announced at a media briefing.

Hutabarat insisted that there were indications of power abuse
committed by the Ministry of Mines and Energy and former PLN
president Kuntoro Mangkusubroto, who served for less than a year
as minister of mines and energy, until 1999.

"We also demand they be held responsible for the agreement and
the extension of the contract instead of its termination in 2001,
regardless of the fact that it was illegal," he added.

Lawyer Fauzie Yusuf Hasibuan, who led the nine-member defense
team for the workers, said the 1994 agreement was a breach of the
1945 Constitution and Law No. 15/1985 on electricity which
stipulates that a contract should not financially burden the
public.

"Moreover, our law regulates that prices should be in rupiah.
In the agreement, PLN's earnings are limited and the contract can
only be annulled by PT Paiton," he told reporters.

Fauzie further explained that in 1999, Kuntoro's predecessor
Adhi Satriya had filed a civil lawsuit against PT Paiton with the
Central Jakarta District Court over irregularities in the
contract.

Kuntoro then withdrew the lawsuit on Jan. 18, 2000 and offered
an interim agreement with PT Paiton on Feb. 21, 2000 which
approved the extension of the 1994 agreement after failure to
amend its content, he said.

"Kuntoro had no right to withdraw the lawsuit. Instead of
fixing the agreement, he approved the new price offered by PT
Paiton. As a result, PLN is now obliged to pay a further $123
million in June 2001 in addition to its $590 million debt,"
Fauzie said.

"Although this is a civil case, hopefully the judges will also
be able to reveal the corruption indicated in the case," he
added. (bby)