Government says PLN makes progress in talks with OPIC

Government says PLN makes progress in talks with OPIC

JAKARTA (JP): State electricity company PT PLN is making
progress in its negotiations with American state insurance firm
Overseas Private Investment Corp. (OPIC) over an outstanding
US$290 million claim, Coordinating Minister of Economy, Finance
and Industry Kwik Kian Gie said on Friday.

Kwik slammed U.S. Ambassador to Indonesia Robert Gelbard for
his statement indicating the U.S. government's disappointment
over the slow progress of the talks between PLN and OPIC.

"The negotiations are nearing conclusion ... Gelbard does not
understand. If you need accurate information, ask Indonesia's
negotiator, PLN's president Kuntoro (Mangkusubroto)," Kwik said
at the presidential office after a meeting between President
Abdurrahman Wahid and a group of American businessmen.

Gelbard earlier said the U.S. government had lost patience
with the slow progress of the OPIC-PLN talks, warning his
government might seize Indonesian assets if it failed to settle
the $290 million claim made by OPIC.

"There is always the possibility of declaring expropriation
(of Indonesian assets) ... If we were to do this, it would result
in a dramatic deterioration of the rupiah and would hurt
Indonesia very much," Gelbard warned.

OPIC made its claim after PLN (PT Perusahaan Listrik Negara)
failed to pay independent power producer MidAmerican Energy
Holding, formerly known as CalEnergy, a sum of $572 million as
ordered by an independent arbitration panel.

MidAmerican filed arbitration proceedings against PLN in
September 1998 after the state company refused to pay for
electricity from MidAmerican's geothermal power plant in Dieng,
Central Java, and after the government suspended its other plant
in Patuha, West Java.

PLN lost the arbitration proceedings last year and was ordered
to pay MidAmerican $572 million. Struck by financial
difficulties, PLN refused to pay the claim, forcing MidAmerican
to call in its OPIC insurance. OPIC paid $290 million of the
claim.

Kwik said Gilbert's statement lacked accuracy.

"If you are talking with Gelbard, you have to be careful,
because he is a temperamental person," Kwik said.

Kuntoro said he was "surprised" at news reports highlighting
Gelbard's statement as the reports did not reflect the reality of
the talks between PLN and OPIC.

"Contrary to the tenor of the newspapers stories, PLN has not
received any expressions of disappointment over the current state
of the negotiations with OPIC," Kuntoro said in a statement.

Kuntoro said while there were issues on which the necessary
compromise had yet to be met, both sides had established a clear
understanding of the other's interests and requirements.

"The talks are continuing in a constructive atmosphere and
both sides are making efforts in good faith to achieve mutually
beneficial results," Kuntoro said.

Minister of Finance Bambang Sudibyo earlier said Indonesia
would not pay OPIC claims because it had no money.

Bambang also said the contracts between CalEnergy and PLN were
negotiated under former president Soeharto's regime and were
hence tainted by corruption, collusion and nepotism.

Kwik also said on Friday the Indonesian government would sign
a letter of intent with the International Monetary Fund (IMF) on
Monday, which would allow the next disbursement of funds to help
the country's ailing economy.

The IMF is overseeing a US$5 billion bailout program to help
the country recover from the economic crisis. (jsk/prb)