ASIATODAY.ID, JAKARTA – The conflict over the divestment of share ownership in the Paiton 3 Steam Power Plant (PLTU) is getting sharper.
The reason is, Mitsui & Co Ltd has sent an official letter confirming that it is ready to sue PT PLN (Persero) and several Indonesian ministries/state institutions to the international arbitration court. In the letter dated January 31 2024, it was explained that PLN’s decision to postpone and withhold approval for Mitsui’s plan to divest Paiton 3 shares had entered the realm of dispute.
The letter, signed by the Chief Operating Officer of Infrastructure Projects Business Unit Mitsui Koichi Wakana, firmly emphasizes that if there is no joint discussion within 30 days from the date the letter was sent, Mitsui has the right to initiate an arbitration process in accordance with the initial Paiton 3 investment sponsor agreement.
“Please note that Mitsui’s intention is to resolve the dispute peacefully and immediately without further escalation. As such, Mitsui respectfully requests PLN’s cooperation to discuss the dispute with us in good faith,” Koichi wrote in the letter, quoted Monday, February 26, 2024.
Mitsui previously planned to sell all its shares in Paiton 3 to Medco Daya Energi Sentosa (a subsidiary of one of Paiton’s existing shareholders, Medco Daya Abadi Lestari), and RH International Singapore Corporation Pte Ltd (a subsidiary of RATCH Group from Thailand). In the initial Paiton 3 investment agreement or called the Expansion Sponsors Agreement which was signed by PLN, Paiton Energy, Mitsui, Nebras Power, and Medco Daya Abadi Lestari in mid-2010, the divestment action plan was actually valid after the commercial operation date.
However, because Mitsui no longer owns more than 50% of the shares at the date of commercial operations after divestment, the agreement does emphasize that the transfer will not take effect unless with prior written approval from PLN.
Initially, Mitsui explained that PLN had actually issued a formal letter of approval as of June 26 2023. PLN had also asked for several legal prerequisites, one of which was a novation agreement.
However, until mid-late 2023, everything changed because PLN had not yet signed the novation agreement that had been given so that Mitsui was unable to complete the transaction. The reason is, PLN stated that it had canceled its previous agreement, and would no longer approve the pending transfer of Mitsui shares due to strict instructions from the Indonesian government that PLN would not approve the transfer of Mitsui shares, unless the only recipient of the transfer was a local Indonesian company.
Therefore, Mitsui defended itself by stating that there was no provision in the Extended Sponsorship Agreement that permitted PLN to pressure Mitsui to sell its interests in Paiton to a local Indonesian company. Apart from that, PLN’s actions also have the potential to violate the protection provided to Japanese investors under the Japan-Indonesia Economic Partnership Agreement (EPA).
“Therefore, PLN’s refusal to give its approval to the pending transfer of Mitsui shares to Ratch and Medco, without a valid legal basis, is a violation of Article 2.2 (a) (ii) of the Extension Sponsor Agreement,” said Koichi. (ATN)
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