Pertamina seeks to resolve dispute with IPP<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
State oil and gas firm Pertamina is seeking an out-of-court
\nsettlement with independent power producer (IPP) Karaha Bodas Co.
\nLLC despite last month's ruling by an international arbitration
\npanel for the former to pay US$261.1 million in compensation for
\nthe cancellation of a power project in 1998.<\/p>\n
Pertamina upstream director Iin Arifin Takhyan claimed on
\nTuesday that the verdict was not final and Pertamina had filed an
\nappeal against the ruling.<\/p>\n
\"Now weUre asking Karaha Bodas to resolve the dispute
\nthrough an out-of-court mechanism for the sake of all parties,\"
\nhe told The Jakarta Post.<\/p>\n
Last month, an arbitration tribunal in Geneva issued a
\nruling ordering both Pertamina and state electricity company PLN
\nto pay $261.1 million to Karaha Bodas, plus interest of 4 percent
\nper year, starting from January 2001.<\/p>\n
The compensation comprises $111 million for lost expenditure, $150 million for lost profit and $66,654.92 for
\ncosts and expenses during arbitration.<\/p>\n
Iin said that Pertamina would approach Karaha Bodas to
\nrecommence the development of the $1 billion Karaha power project
\nin Telaga Bodas and Karaha villages, in Tasikmalaya and Garut
\nregencies.<\/p>\n
RIt means Karaha Bodas and PLN will have to renegotiate
\nthe power selling rate just like in the case of several other
\nIPPs,S he said.<\/p>\n
The negotiation will also determine the amount of arrears
\nto be paid by either Pertamina or PLN to Karaha Bodas, he added.<\/p>\n
PLN officials were not available for comment.<\/p>\n
In 1994, Pertamina and Karaha Bodas signed a contract to
\nallow the latter to exploit geothermal power in West Java to be
\nused for the planned power project.<\/p>\n
Pertamina is designated by the government to regulate the
\ngeothermal, oil and gas industry in the country.<\/p>\n
Karaha Bodas then signed an energy sales contract --
\nanother form of power purchasing agreement -- with PLN to build a
\n400 megawatt power plant.<\/p>\n
Under the contract, PLN was to buy electricity from Karaha Bodas
\nat between 5.6 cents and 8.4 cents per kilowatt hour (kWh) for 30
\nyears.<\/p>\n
But the contract, along with the other 26 IPPs' contracts, was
\npostponed by the government in 1998 because PLN was unable to pay
\npower rates as stipulated in the contracts amid the sharp
\ndepreciation of the rupiah during the 1997-1998 financial crisis.<\/p>\n
PLN had to pay power rates in dollars while it generates
\nrevenue in rupiah.<\/p>\n
Karaha Bodas said it had invested about $100 million when
\nthe project was postponed. Karaha Bodas is 37.5 percent controlled
\nby American giant Florida Power, 37.5 by New York-based Caithness,
\n5 percent by Japan's Tomer and 10 percent by local company Sumarah Daya
\nSakti.<\/p>\n
Sumarah is owned by Muhammad Bawazier and Lodito Purwasih.<\/p>\n
Besides Karaha Bodas, several IPPs also sought
\ninternational arbitration to resolve their dispute with PLN, such
\nas Himpurna California Energy, which built the Dieng geothermal
\npower plant in Central Java province.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-seeks-to-resolve-dispute-with-ipp-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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