RI-China airplane deal in stalemate

The Jakarta Post | Wed, 02/25/2009 5:50 PM  

The row between Jakarta and Beijing intensifies as the latest negotiation on the purchase of 15 airplanes from China’s Zian Aircraft Industry Company (Xian) by Indonesia’s state airline PT Merpati Nusantara Airlines ends with a deadlock. 

“The government met with Xian representatives last week, but failed to reach a new deal,” State Minister for State Enterprises Sofyan Djalil told reporters in Jakarta on Wednesday. 

Sofyan said the meeting discussed the possibility for renewing a deal, which was signed back in June 7, 2006, on the airline purchases. 

Under the initial deal, Merpati agrees buy 15 MA-60 airplanes at a price of US$15 million each. So far Merpati had only bought two airplanes and refrained for paying for the rest after finding that the planes were overpriced. 

Merpati suspects a price mark-up behind the deal as the normal price for a plane with the same specification as the MA-60 is about $11 million at the international market. 

Furious with Merpati bailing out, Xian demands the company to pay Rp 1 trillion ($84 million) in penalty while Beijing is considering canceling its plan to finance the government’s 10,000 megawatt power plant projects. 

Sofyan said the government would continue to engage in negotiation with the Chinese government, but with the main priority of protecting Merpati from losses. 

“We must not let Merpati suffer any losses,” he said. (and)