Govt asks for haircut from Paiton

Minister of Energy and Mineral Resources Purnomo Yusgiantoro insisted that PT Paiton Energy, the owner of the giant coal-powered power plant in Paiton, East Java, had to cut the amount of arrears owed by state electricity company PLN to Paiton as a prerequisite to sign the third interim agreement between the two energy companies.

"Currently we are finalizing the agreement, we hope we can sign the agreement before the convening of the Consultative Group of Indonesia (CGI)," Purnomo said.

The next interim agreement would be the fourth and it would govern short-term relations between PLN and Paiton for the period of October through December 2001.

There are some issues still hanging between Paiton and PLN, including the electricity tariffs, which PLN considers too high, and the amount of arrears PLN owed to Paiton totaling $805 million.

"Yes the total amount of the arrears is quite large, but we are trying to get a hair cut for PLN," Purnomo said.

He wished that problems with Paiton and other independent power producers could be settled altogether as Indonesia would rely on them to supply electricity in the future, especially when demand for electricity continues to increase. (*)