Government to talks with OPIC over controversial deal<\/p>\n
JAKARTA (JP): The government is currently still in talks with
\nU.S. government-owned insurance firm Overseas Private Investment
\nCorp. (OPIC) over a controversial payment agreement signed last
\nmonth by former finance minister Rizal Ramli, according to
\npresident of the state-owned electricity company PLN Eddie
\nWidiono.<\/p>\n
But Eddie did not clearly said whether the "talk" was meant to
\nrenegotiate the settlement deal.<\/p>\n
"Now, PLN and the government legal team is talking with the
\nOPIC legal team about this (the settlement agreement)," he told
\nreporters on the sideline of an informal meeting between the
\nministry and associations of the mining industry.<\/p>\n
He declined to provide further details.<\/p>\n
Rizal signed an agreement with OPIC last month to pay some
\nUS$260 million in compensation for the government's past decision
\nto cancel power projects in West Java and Central Java.<\/p>\n
The agreement followed a ruling by an arbitration panel
\nordering the government to pay OPIC some $572 million in
\ncompensation. But OPIC later agreed to cut down the compensation
\ndemand to around $260 million.<\/p>\n
OPIC provides insurance for U.S. power company MidAmerican
\nEnergy Holdings, which develops the Dieng and Patuha power plants
\nin Central Java and West Java.<\/p>\n
But the agreement signed by Rizal became a controversy not
\nonly because he made the deal at a time when newly-elected
\nPresident Megawati Soekarnoputri had already put the cabinet team
\nat the time in a non-active status, but also because the
\nagreement deviated from the initial government proposal, and
\nwould inflict great losses to the country particularly because of
\nthe higher interest rate and the link to the Paris Club deal,
\naccording to earlier reports quoting sources.<\/p>\n
The government is seeking a debt rescheduling facility from
\nthe Paris Club of creditor nations over some $2.8 billion in
\nsovereign debt maturing this year.<\/p>\n
According to the agreement signed by Rizal, if the government
\nfails to reach a rescheduling deal with the Paris Club, OPIC had
\nthe rights to demand Indonesia to accelerate the payment of its
\nobligation.<\/p>\n
There has been growing pressure for the government to
\nrenegotiate the agreement. Top government officials have been
\ntightlipped over the issue.<\/p>\n
Separately, Minister of Energy and Mineral Resources Purnomo
\nYusgiantoro urged PLN to start the operation of the 60 megawatt
\nDieng geothermal.<\/p>\n
"There is an idle 60 megawatt (mw) power plant in Dieng. We
\nwant the plant to be operated as soon as
\npossible to raise money and then to pay OPIC," Purnomo
\ntold reporters.<\/p>\n
Purnomo said, in the medium to long term, he wanted the Dieng
\npower plant to be expanded to a total of 180 MW, and to build
\nanother 160 MW plant in Patuha.<\/p>\n
"This expansion we believe will make the power plants
\neconomically sound business," he said.<\/p>\n
He added that the expansion plan would require approximately a
\nfresh investment of about $300 million, which would be raised
\neither from the current operator PLN and state oil and gas
\ncompany or from new investor.<\/p>\n
Dieng and Patuha are among the 27 IPPs the government had
\nsigned contracts with to meet rising power demands in early
\nnineties.<\/p>\n
But the economic crisis in 1997, which left PLN financially
\ncrippled forced the government to renegotiate most of the IPPs
\ncontracts.<\/p>\n
The government is seeking to cancel contracts of power
\nprojects that have not begun construction yet, and renegotiate
\npayment conditions for the power supplies from those that are
\nalready operating.(Iwa)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-to-talks-with-opic-over-controversial-deal-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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