Pertamina to fight asset seizure<\/p>\n
Fitri Wulandari, Jakarta<\/p>\n
PT Pertamina said it will take legal action to counter a Hong
\nKong court's decision to temporarily freeze its overseas assets
\nfollowing a prolonged dispute between the state oil and gas
\ncompany and U.S.-based power company Karaha Bodas Company (KBC).<\/p>\n
Alfred Rohimone, Pertamina's finance director, said the court
\nhas approved a temporary seizure of Pertamina's assets in Hong
\nKong, including those belonging to Pertamina Energy Trading Ltd,
\nor Petral (a trading company owned by Pertamina), Tugu Insurance,
\nand Kipco (Korea Indonesia Petroleum Company Ltd).<\/p>\n
The court also ordered Petral to pay its revenue from May 2002
\nto date to KBC.<\/p>\n
\"We are preparing lawyers. The assets should not be seized as
\nthe U.S. court has ruled that Pertamina should pay the
\narbitration award to KBC,\" Alfred told reporters on Wednesday
\nafter a hearing with the House energy commission at the House of
\nRepresentatives.<\/p>\n
Alfred said the court order would be effective for 23 days
\nfrom July 23.<\/p>\n
KBC has demanded that Pertamina pay US$15 million plus $1
\nmillion in fees if the former is to drop the lawsuit against
\nPertamina in Hong Kong.<\/p>\n
Alfred declined to comment on whether Pertamina would accept
\nthe settlement offered by KBC.<\/p>\n
However, he acknowledged that the seizure would affect the
\ncompany's imports of crude and oil-based products as 60 percent
\nof the company's imports are carried out by Petral.<\/p>\n
KBC was one of 27 independent power producers (IPPs) whose
\nprojects were terminated by the government following the economic
\ncrisis in the late 1990s. KPC at the time had a joint geothermal
\npower operation contract with Pertamina.<\/p>\n
A Swiss arbitration court ruled in 2000 that Pertamina must
\npay compensation to KBC for the termination of the project.
\nPertamina challenged the arbitration ruling in courts in the
\nU.S., Canada, Hong Kong and Singapore.<\/p>\n
But early this year, a U.S. court rejected Pertamina's appeal
\nagainst the arbitration award.<\/p>\n
A U.S. court has frozen Pertamina accounts in the Bank of New
\nYork and Bank of America that held royalties from overseas oil
\nand gas sales. The court agreed to release part of the
\ngovernment's share of revenue but retained Pertamina's share,
\nwhich is actually equal to the arbitration award of US$ 291
\nmillion plus interest.<\/p>\n
Pertamina's president director Ariffi Nawawi said that the
\ncompany was also seeking an out-of-court settlement to minimize
\nstate loses.<\/p>\n
Sidebar<\/p>\n
Govt to reimburse subsidy spending<\/p>\n
Director General of Financial Institutions at the Ministry of
\nFinance Darmin Nasution said the government would immediately
\nprovide funds to Pertamina so that it could carry out its fuel
\nimportation plan.<\/p>\n
He said that the reimbursement of the fuel subsidy spending
\nundertaken by Pertamina should be enough to finance the fuel
\nimports.<\/p>\n
\"Pertamina does not need a government guarantee. The best
\nsolution is to improve the company's liquidity,\" he said on
\nWednesday.<\/p>\n
Pertamina had earlier asked for a government guarantee to
\nallow the company to secure bank loans for fuel imports due to
\ncash flow problems as the government had not reimbursed the fuel
\nsubsidy spending, estimated at about Rp 12.9 trillion for the
\nperiod from January to June of this year. -- JP<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-to-fight-asset-seizure-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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