PLN, Edison reach agreement over Paiton

The state electricity firm PLN has reached a preliminary agreement with Edison International of the U.S. over high profile dispute in the power-purchasing contract.

Chief executive officer of Edison Mission Energy Alan Fohrer welcome the agreement. "We appreciate the effort of the government of Indonesia to negotiate and seek a way out which benefit the two sides, and we're waiting to provide good electricity to the Indonesian people."

Edison Mission Energy, a unit of Edison International, owns a 40 percent stake in PT Paiton Energy Co., which owns the East Java Paiton power project.

PLN and Paiton signed a contract a few years back in which the former would purchase power from the later at an agreed set of price. But PLN decided to walk out of the contract last year on grounds that the company was forced to sign the contract when the former authoritarian president Soeharto was still in power.

PLN had also said that the power-selling price was too expensive, which would lead the company into bankruptcy.

PLN had filed a lawsuit at the Jakarta court against Paiton for alleged corrupt practice in making the contract.

But President Abdurrahman Wahid decided last year to drop the court settlement process, and instead vowed to seek an out of court settlement mechanism.

PLN has signed power-purchasing contract with 26 independent power producers including Paiton. (*)