IMF urged to testify in favor of Pertamina at U.S. courts
IMF urged to testify in favor of Pertamina at U.S. courts
Moch. N. Kurniawan, The Jakarta Post, Jakarta
Experts and legislators urged the International Monetary Fund (IMF) on Tuesday to testify at the U.S courts in favor of Indonesia in a legal dispute between state oil and gas firm Pertamina and U.S. independent power producer Karaha Bodas Co. LLC.
Outspoken legislator Priyo Budi Santoso said that the fund must clarify to the courts that the suspension of the Karaha Bodas power project by the government in the late 1990s was a matter of force majeure.
"The IMF must bear moral responsibility by testifying to the U.S. courts because it was the party that suggested the government suspend many megaprojects at that time," he told The Jakarta Post.
Priyo is a member of House of Representatives Commission VIII, which oversees the energy sector.
He said that if the IMF declined to testify, the public would doubt its commitment to helping the country.
Priyo made the statement following a complaint voiced by Pertamina's president Baihaki Hakim on Monday that the IMF had recently rejected Pertamina's request for it to testify at the New York court in favor of the state company.
The U.S. court is now hearing a lawsuit filed by Karaha Bodas against Pertamina over the suspension of its geothermal power project in West Java.
The company, which is controlled by two U.S. energy firms, Florida Power and Caithness, is seeking US$261 million in compensation for the suspension of the project.
Baihaki said that the geothermal power plant was one of a number of giant energy projects suspended by the government in September 1997 amid the economic crisis -- a move that was supported by the IMF.
Baihaki accused the IMF of trying to wash its hands in the case by refusing to clarify at the U.S. court that the suspension was a matter of force majeure.
The Karaha Bodas case is one of several disputes faced by either the Indonesian government or state companies in the energy sector as a result of the suspension of the energy project. Last year, the government agreed to pay US$260 million to the U.S. state insurance firm Overseas Private Investment Corporation (OPIC) as compensation for the suspension of the Patuha and Dieng geothermal power projects owned by American firm CalEnergy.
Economist Dradjad H. Wibowo of the Institute for Development of Economics and Finance (Indef) and energy expert Riki F. Ibrahim shared Priyo's view.
"Pertamina and the government must continue asking the IMF to issue a written statement stating that the suspension was either a necessary or unavoidable measure," Dradjad told the Post.
Should the IMF maintain its refusal, he suggested the government sue the IMF for allegedly not having the goodwill to help the country recover from the crisis.
According to him, the Karaha case was the latest failure by the IMF to predict the negative consequences of its recipe for healing the country.
He cited, as a previous IMF failure, the collapse of the country's banking industry as a result of the IMF-recommended closure of 16 banks in 1997.
Riki said if the IMF continued to refuse to testify at the court in favor of Pertamina, the agency should at least help persuade Karaha Bodas to resolve the dispute out of court.