PT Paiton denies marking up prices at power plant
PT Paiton denies marking up prices at power plant
JAKARTA (JP): PT Paiton Energy Company, which is building the
Paiton I power plant in Probolinggo, East Java, denied on Tuesday
charges of mark-up practices leveled by state electricity company
PT Perusahaan Listrik Negara (PLN).
Tycoon Hashim Djojohadikusumo, who is the co-owner of the
1,230 megawatt (MW) power plant, said the company had set a high
price for its power supplies to PLN due to the high investment
costs spent by the company on the project.
He said the high investment costs were due to creditors who
had imposed a high interest rate on its loan to Paiton Energy for
the project given Indonesia's political instability.
"The (high) price is not because of mark-up practices, but due
to high investment costs as the result of the country's political
instability," Hashim told reporters.
He said the company's creditors, Japanese Exim bank and US
Exim bank, audited the project to ensure there were no dubious
deals before providing the loan.
Hashim was commenting on the statement by PLN's president Adhi
Satriya that Paiton Energy had committed "worldclass" mark-up
practices in setting the price for its power supplies.
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, controlled by Hashim.
Under the 30-year power purchase agreement (PPA) signed in
1994, PLN has to buy power from Paiton Energy at 8.4 cents per
kwh in the first six years, at 8.2 cents during the next six
years and 5.4 cents for the remaining 18 years.
Adhi said based on the international pricing formula, the
reasonable prices for the power supplies from Paiton I was about
3.5 cents per kwh
Adhi also said PLN is collecting evidence to prove mark-up
practices allegedly conducted by Paiton Energy and other
independent power produces (IPP) and will ask courts to annul the
contracts if the mark-up practices were proved.
He also said PLN would take legal action against PLN's former
leader who was responsible for the awarding of the PPAs that
carry unreasonably high prices.
PLN has signed 27 PPAs with IPPs which are mostly joint
ventures between international energy companies and former
President Soeharto's family and cronies.
Adhi made the statement following a stalemate in the
negotiations between PLN and several IPPs, including Paiton
Energy and PT Jawa Power on the possibility to reduce their power
prices.
PT Jawa Power is owned by Siemens of Germany, PowerGen of
Britain and local company PT Bumipertiwi Tatapradipta, controlled
by former President Soeharto's son Bambang Trihatmodjo.
It is developing two power units -- popularly known as Paiton
II -- close to Paiton I with a combined power generation capacity
of 1,220 MW.
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.
Hashim admitted that PLN and Paiton Energy and several other
IPPs could face deadlock in the contract renegotiation talks.
He warned that the home country governments of the IPPs,
including the American, Japanese, German and British governments,
could step in to help settle the dispute if the talks between the
IPPs and PLN were deadlocked.
"The dispute could most probably be settled in government-to-
government talks," Hashim said. (jsk)