CalEnergy protests project cancellation<\/p>\n
JAKARTA (JP): The United States giant power company CalEnergy
\nInternational protested yesterday the government's latest
\ndecision to put on hold its power project in Patuha, West Java.<\/p>\n
\"CalEnergy International and Patuha Power are gravely
\ndisappointed with the lack of transparency in the government
\nprocess review (which leads to putting on hold the Patuha power
\nproject),\" chief operating officer of CalEnergy Asia Donald M.
\nO'Shei said in a statement sent to The Jakarta Post yesterday.<\/p>\n
The 80 Megawatt (MW) geothermal Patuha 1 power project was
\namong the eight projects placed under review by the presidential
\ndecree announced by Minister\/State Secretary Moerdiono over the
\nweekend. The decree also canceled again seven other big projects.<\/p>\n
The 15 projects have been given the go-ahead by a presidential
\ndecree issued on Nov. 1 last year.<\/p>\n
Moerdiono said Saturday that the government had intended to
\ncontinue with the projects but after another review, it was
\nlearned that they required huge financing that could undermine
\nthe government's efforts to deal with the monetary crisis.<\/p>\n
CalEnergy had signed a contract with the state-owned
\nelectricity company to develop four geothermal power units at
\nPatuha -- which are known as Patuha Unit 1, 2, 3, 4 -- with the
\ncombined capacity of 240 MW.<\/p>\n
The Patuha Unit 2, 3, and 4 were postponed by the Sept. 20,
\n1997 presidential decree.<\/p>\n
Aside from the Patuha power project, CalEnergy has also signed
\ncontracts to develop geothermal power plants in Dieng, Central
\nJava and Bedugul, Bali.<\/p>\n
CalEnergy sets up Patuha Power with its Indonesian partner PT
\nMahaka Energy to develop the project, where CalEnergy holds the
\nmajority of the shares.<\/p>\n
O'Shei said CalEnergy and its partner could not accept the
\ngovernment's decision to place the Patuha power project under
\nreview again because the project's financing had been closed and
\nthe construction had been going on for six months and was
\nscheduled to come on line in 1999.<\/p>\n
According to O'Shei, Patuha Power had spent US$136 million for
\nthe construction and financing of the Patuha power project.<\/p>\n
O'Shei also noted that CalEnergy had been allowed to continue
\nits Patuha Unit 1 project by the November 1997 presidential
\ndecree not because of nepotism or personal connections with its
\nlocal partner, Mahaka Energy.<\/p>\n
Mahaka Energy \"is not a large conglomerate or connected by
\nnepotism to controlling Indonesians. Negotiations of the energy
\nsales contract with PLN was a transparent and arms length
\ntransaction involving multiple parties over two and a half
\nyears,\" he said.<\/p>\n
Many of the 15 projects which were given the go-ahead by the
\nNovember 1997 presidential decree are controlled or partly owned
\nby President Soeharto's children and friends.<\/p>\n
O'Shei said if the government put the 15 projects on hold to
\nprevent more foreign borrowing, the Patuha Unit 1 should not be
\nexcluded from the 15 projects because the project's financing had
\nbeen closed.<\/p>\n
\"The loan for Patuha Unit 1 was closed and funds distributed
\nby the consortium of international lenders (led by Credit Suisse
\nFirst Boston) in August of last year. No further loans will need
\nto be arranged for Patuha 1,\" he said.<\/p>\n
He also warned the Indonesian government that the project
\ncarried insurance against violation of contracts, backed by the
\nU.S. government.<\/p>\n
\"If violations of legal obligations of the parties cause a
\nclaim under the insurance, the U.S. government will be entitled to
\nreimbursement from the Republic of Indonesia,\" he said. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/calenergy-protests-project-cancellation-1447893297",
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"sponsor": "Okusi Associates",
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