CalEnergy ready to settle dispute with local firms

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)