Karaha refuses to resume project<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
An independent power producer Karaha Bodas Co. LLC said on Friday
\nit had rejected an offer from state-owned oil and gas company
\nPertamina to restart its geothermal power project in Karaha
\nBodas, West Java.<\/p>\n
Chris Dugan from Karaha's law firm of Jones, Day, Reavis &
\nPogue said the company was not interested in continuing the
\nproject that had become a center of dispute between both
\ncompanies.<\/p>\n
\"Restarting the project is economically impossible.<\/p>\n
\"It will not make Karaha whole for the damage that it has
\nalready suffered while investing in Indonesia,\" he told the
\nJakarta Post.<\/p>\n
Dugan said the company was only interested in Pertamina
\nkeeping its word to obey the international arbiter's ruling which
\nordered Pertamina to pay US$261 million in compensation to Karaha
\nfor the suspension of its power project in 1998.<\/p>\n
It was the government which actually ordered the suspension,
\naccording to Pertamina.<\/p>\n
\"Pertamina has promised to pay the award, and it should honor
\nits promise and keep its word,\" Dugan reiterated.<\/p>\n
Separately, Pertamina finance director Ainun Naim said
\nPertamina's offer to Karaha was still open despite the rejection.<\/p>\n
\"The project was temporarily suspended due to the unexpected
\neconomic crisis.<\/p>\n
\"As the suspension is only temporary, we plan to continue
\nthe project. We're waiting for the government's approval and we
\nwill give Karaha priority to restart the project,\" he told the
\nPost.<\/p>\n
Ainun added that Pertamina would also continue its appeal to
\nan Indonesian court in its fight against the arbitration ruling.
\nThat appeal was filed earlier this month.<\/p>\n
Karaha entered into contracts with Pertamina and state
\nelectricity company PLN in 1994 to develop a geothermal power
\nplant in Karaha Bodas.<\/p>\n
It had invested US$100 million until the Indonesian government
\ndecided to suspend the project, along with other Independent
\nPower Provider (IPP) projects in early 1998 to help ease the
\nfinancial burden of PLN.<\/p>\n
Karaha then filed a law suit against Pertamina, PLN and the
\ngovernment with an international arbitration court in Switzerland
\nin 1998, demanding compensation for the suspension.<\/p>\n
In December 2000, the arbitration tribunal issued a ruling
\nordering both Pertamina and PLN to pay $261 million to Karaha,
\nplus interest of 4 percent per year, starting from January 2001.<\/p>\n
Last December, Karaha won confirmation from the U.S. Federal
\nCourt in Houston, which issued a verdict to uphold the ruling of
\nthe arbitration tribunal.<\/p>\n
It has also begun a campaign to seize Pertamina assets in
\nNorth America including Texas, New York, Delaware and Canada,
\nsaying that Pertamina had broken its contract and was not abiding
\nby the international arbiter's verdict to pay compensation.<\/p>\n
Karaha is 37.5 percent owned by American energy firm Florida
\nPower, 37.5 percent owned by New York-based Caithness, 5 percent
\nby Japan's Tomer and 10 percent by local company Sumarah Daya
\nSakti.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/karaha-refuses-to-resume-project-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
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