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)