BoA freezes Pertamina assets<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
Independent power producer Karaha Bodas Co. LLC said Bank of
\nAmerica (BoA) had frozen more than US$130 million in funds
\nbelonging to the state-owned oil and gas firm Pertamina under a
\nU.S. court order.<\/p>\n
Karaha legal counsel Christopher Dugan said the move was by
\nthe power company's efforts to collect $261 million in unpaid
\ncompensation from Pertamina.<\/p>\n
\"As Pertamina continues to defy the courts, we (Karaha)
\nannounced that BoA has frozen more than $130 million of
\nPertamina's funds,\" Dugan said in statement available to The
\nJakarta Post on Wednesday.<\/p>\n
Karaha entered into a contract in 1994 with Pertamina and
\nstate electricity company PLN to develop a $1 billion power
\nproject in Karaha, West Java.<\/p>\n
But the 400-megawatt power project was suspended by the
\ngovernment, along with several other power projects, following
\nthe 1997 financial crisis.<\/p>\n
Unable to proceed, Karaha, which has invested $100 million
\nprior to the suspension, filed a lawsuit against the government,
\nPertamina and PLN with a Switzerland-based arbitration.<\/p>\n
Karaha won the arbitration ruling in December 2000, which
\norder Pertamina and state electricity company PLN to pay $261
\nmillion to Karaha, plus 4 percent interest per year, starting
\nJanuary 2001.<\/p>\n
Last December, Karaha won a confirmation from U.S. Federal
\nCourt in Houston, which issued the verdict to uphold the ruling
\nof the arbitration tribunal.<\/p>\n
But instead of paying the compensation, Pertamina filed a law
\nsuit at the Central Jakarta District Court to annul the
\ninternational arbitration ruling.<\/p>\n
This has prompted Karaha to launch a campaign to freeze
\nPertamina's assets worldwide to satisfy the compensation award.<\/p>\n
However, Dugan said Karaha would only target Pertamina's
\nassets, not the assets that belong to Pertamina's production
\nsharing partners.<\/p>\n
Dugan then said, at present, courts in Singapore and Hongkong,
\nlike the U.S. court in Texas, had also entered judgment against
\nPertamina, ordering Pertamina to pay the $261 million
\ncompensation.<\/p>\n
He added that Karaha would also vigorously oppose Pertamina's
\nlegal action at the local court, saying the Pertamina move would
\nonly harm Indonesia's image in the eyes of international
\ninvestors.<\/p>\n
With the move, Pertamina was sending a message to foreign
\ninvestors that Indonesian state-owned enterprises could breach or
\nterminate their contracts at will and with impunity, and that it
\ndidn't care what foreign courts rule, he said.<\/p>\n
\"This attitude will seriously damage the investment climate in
\nIndonesia,\" Dugan said.<\/p>\n
Pertamina officials and its legal counsel were not available
\nto comment.<\/p>\n
But according to a source close to Pertamina, the funds Karaha
\nhad restrained at BoA in New York belong to the government of
\nIndonesia, not Pertamina.<\/p>\n
\"The restraint is temporary, pending further review and
\nanalysis by a judge. It is wrong for these funds to be held up,\"
\nthe source told the Post.<\/p>\n
Pertamina and the government had made extensive submissions in
\ncourt to show that the funds should be released, the source
\nadded.<\/p>\n
The source said Pertamina would also continue its Jakarta
\ncourt appeal to annul the arbitration ruling, arguing the ruling
\ncould be canceled by local court as stipulated in the contract.<\/p>\n
Meanwhile, the government has allowed Karaha to resume the
\npower project and several others to avoid power crisis in the
\nfuture.<\/p>\n
Last week, President Megawati Soekarnoputri issued decree No
\n15\/2002 on the revocation of decree No. 39\/1997 which suspended
\nmany mega projects.<\/p>\n
Minister of energy and mineral resources followed it up by
\nissuing decree No 216\/2002, allowing the Karaha Bodas project
\ndevelopment to be restarted.<\/p>\n
Karaha has reportedly refused the offer.<\/p>\n
Karaha is controlled by American giant Florida Power and New
\nYork-based Caithness.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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