RI wants to meet Powell over power project dispute<\/p>\n
Dow Jones, Jakarta<\/p>\n
The Indonesian government said Wednesday it hopes to hold
\ntalks with U.S. Secretary of State Colin Powell over a dispute
\nbetween its state-owned oil and gas company and Karaha Bodas Co.,
\na power company owned by mainly by U.S. investors.<\/p>\n
Powell will be in Jakarta Friday for a one-day visit.<\/p>\n
Energy Ministry Purnomo Yusgiantoro said he hoped to bring up
\nPertamina's dispute with Karaha Bodas with Powell during the
\nvisit.<\/p>\n
\"The government is seeking a win-win solution,\" Purnomo told
\nreporters.<\/p>\n
An international arbitration court ordered Pertamina to pay
\n$261 million to Karaha Bodas as compensation for canceling a
\npower project in 1998 in the wake of the Asian financial crisis.<\/p>\n
But Pertamina has refused to pay the award, and is attempting
\nthrough the Jakarta court system to overturn the arbitration
\ndecision. A U.S. court has ordered Pertamina to drop the attempt
\nand found the company in contempt of court.<\/p>\n
The U.S. Court of Appeals ruled in June to uphold a decision
\nin the U.S. courts to allow Karaha Bodas to freeze Pertamina
\nassets worth $275 million.<\/p>\n
The Karaha dispute is the latest in a series of heated legal
\nbattles over Indonesian power projects, some of which have caused
\nconsiderable tension in relations between the U.S. and Indonesia.<\/p>\n
Many of those ventures began during Indonesia's boom years in
\nthe mid-1990s and involved family members of former President
\nSuharto or other politically powerful Indonesians. But the Asian
\neconomic crisis and the plunge in the value of the rupiah caused
\nmany of the deals to fall apart amid allegations of graft and
\ncontract padding. Foreign investors denied those allegations and
\nresponded with counterclaims for compensation for breach of
\ncontract.<\/p>\n
Karaha, which is controlled by Florida-based FPL Group Inc.
\nand Caithness Energy LLC of New York, agreed in 1994 to build a
\ngeothermal power project on Indonesia's main island of Java with
\nPertamina and Indonesia's state electricity company, Perusahaan
\nListrik Negara, or PLN. But under pressure from the International
\nMonetary Fund to reduce expenditure during the financial crisis,
\nthe government canceled the plan in 1998 along with 15 other
\nprojects.<\/p>\n
Karaha, which claims that it already had invested about $100
\nmillion in the project, sued Indonesia, Pertamina and PLN. In
\nDecember, 2000, an arbitration court in Switzerland ruled against
\nPertamina and PLN and awarded Karaha $261 million in compensation
\nfor its costs and loss of future profits.<\/p>",
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"sponsor": "Okusi Associates",
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