Power rift emerges between VP, Hatta

Rendi A. Witularand Hans David Tampubolon
THE JAKARTA POST/JAKARTA

While ties between Vice President Boediono and Coordinating Economic Minister Hatta Rajasa may seem fine, seeds of rift and rivalry may have emerged.According to a high-ranking government official close to Boediono, contentious issues related to electricity and gas management have strained relations between the top economic authorities.

Differing approaches to the problems of 50 independent power producers (IPPs) recently sent relations between Boediono and Hatta to a new low, the official said."Hatta wants a presidential decree to be issued so that the government can be directly involved in helping out the companies, while Boediono insists that they should resolve their problems with [state electricity company] PT PLN direct- ly, based on business-to-business [B2B] principals," he said.

The power companies, having gained operating licenses during President Susilo Bambang Yudho-yonos first term, are owned by politically wired businessmen closed to the Presidents inner-circle, including current PLN president director Dahlan Iskan.

The companies have asked the government to renegotiate their contracts, claiming unexpected increases in costs in the construction of power plants, unfavorable electricity selling prices to PLN, and a lack of access to bank loans.However, PLN says most producers underperformed because of mismanagement and inflated investment costs.

Speculation has emerged that several of the producers are seeking to pass off their losses and inefficiencies to PLN by demanding higher rates for their electricity.Effendi Simbolon, a member of the Indonesian Democratic Party of Struggle (PDI-P) and the deputy chairman of the House of Representatives Commission VII for energy and mining, confirmed the rift.

"Ive heard of the strained relations - not just because of the IPP issue, but also because of opposition to a gas allocation for PLN," he said."Hatta wants the gas to be supplied to PLN directly, while Boediono insists that this cannot be done [because of long-term contracts with overseas buyers]."

In a discussion at the House of Regional Representatives (DPD) on Friday, Thamrin Amal Tamagola of the University of Indonesia said there was a potential rift between Boediono, a veteran technocrat, and Hatta, amid weak leadership from the president.

"There are two dominant groups in Cabinet One that belongs to Hatta and the other to Boediono," he said. "Since the presidential election, Boediono groups dominance has been pushed aside by that of Hatta. The public needs to watch whether Hatta manages to prevent Boediono from having any authority at all."

Hatta, a canny politician and the chairman of the National Mandate Party (PAN), recently denied any rift with Boediono, insisting his loyalty to the President and Vice President."Theres no such thing. My relations with Pak Boediono are just fine," he said. However, he admitted he had a different approach to settling the issue of the IPPs.

"The point is to settle it based on a B2B approach with a presidential decree. However, this cannot be done. So I have used a legal umbrella to settle the problem, based on a coordinating minister policy," he said.Boediono spokesman Yopie Hidayat also denied any rift between Boediono and Hatta. "Thats a gross speculation. Theres no strained relations between them."