Indonesia’s Economic Minister ordered Perusahaan Listrik Negara (PLN) to drop a lawsuit against the IPP Paiton Energy. He said all disputes over power pricing should be settled out of court.
The move is an abrupt switch in policy, and will affect similar disputes. The row between PLN and Paiton has been going on since devaluation of the rupiah during Asia’s financial crisis.
PLN launched a suit against Paiton in October, to annul its power purchase agreement with the IPP because it claimed the price it was obliged to pay for power was exorbitant.
While PLN must pay between 5.5 and 8.5 cents per kWh for the power from Paiton, it is only able to sell the power that is produced by the plant to its customers at the equivalent of approximately 3 cents/kWh.