CalEnergy ready to settle dispute with local firms
JAKARTA (JP): Himpurna California Energy (HCE) Ltd, a subsidiary of U.S. giant power company CalEnergy Co., owner of the Dieng geothermal power project in Central Java, said on Thursday it was ready to settle the payment dispute with local contractors amicably.
CalEnergy vice president for Indonesia Frederick L. Manuel, in a press statement sent to The Jakarta Post, called on the local contractors, which claimed that the company had missed 10 months of payments amounting to US$40 million for their materials and services, to submit their claims to the company for review and discussion.
However, Manuel said, the contractors should also urge state electricity company Perusahaan Listrik Negara (PLN) and the Indonesian government, as the guarantor of the power purchase agreement (PPA) between the company and PLN, to honor its payment obligations to the project.
"Although the Dieng project has been fully completed, PLN has failed to pay the project's monthly invoices and has otherwise interfered with the performance by HCE of its contractual rights," Manuel said, adding that HCE had invested hundreds of millions of U.S. dollars in the development of the 400 Megawatt (MW) geothermal power plant.
As well as Dieng, CalEnergy also has two geothermal power projects in Patuha, West Java and Bedugul, Bali. The two power projects had been shelved by the government in a retrenchment measure to cope with the monetary crisis.
A group of 22 contractors, which claimed to have provided services and materials for the development of CalEnergy's power projects in Dieng, Patuha, and Bedugul, expressed concerns to the press on Wednesday over CalEnergy's failure to pay for their services and materials.
They said they had filed complaints with the holding company of CalEnergy Company Inc. in Omaha, Nebraska, but it said it was not responsible for its subsidiaries' failure to meet their financial obligations.
They had asked the United States embassy in Jakarta to help them procure the payment but the embassy suggested they write a letter to the U.S. government private sector financing and insurance arm, the Overseas Private Investment Corporation (OPIC) to ask the agency to settle the case.
Manuel however suspected that some of the complaining companies had no valid claims against the project because they had breached contracts with HCE.
"We note certain parties claiming to be creditors do not have valid claims against the project as they are in breach of contractual obligations or their claims are otherwise disputed,"
"Unfortunately, such parties appear to be attempting to take advantage of a confusing situation," Manuel added but did not name the companies.
CalEnergy filed suits in August at the United Nations Commission on International Trade Law (UNCITRAL) against PLN and the Indonesian government for failure to pay power supplies from the Dieng power plant since the start of operation in March.
It said monthly power supplies from the plant cost between US$4.5 and $5 million.
The company also sued the Indonesian government for suspending its geothermal project in Patuha, arguing the action was in conflict with the contract and it had made its financiers suspend disbursement of funds for the project. (jsk)