Indonesia will settle OPIC's claim: Sukardi

Indonesia will settle OPIC's claim: Sukardi

JAKARTA (JP): State Minister of Investment and State
Enterprises Development Laksamana Sukardi said on Friday that
Indonesia would negotiate with the American government or the
U.S. Overseas Private Investment Corp. (OPIC) over the claim it
paid to Calenergy International.

"Indonesia wants to solve the case through negotiations,"
Laksamana said on the sidelines of a seminar.

Laksamana apparently made the statement to calm jitters among
investors caused by finance minister Bambang Sudibyo's statement
earlier this week that the government had no money to pay the
claim.

Bambang said Indonesia would not reimburse OPIC for the US$290
million it paid to Calenergy last November.

The claim was made after state electricity company PT PLN
failed to pay Calenergy a sum awarded to the latter by an
independent arbitration panel.

Bambang said the contract, negotiated under the Soeharto
regime, was corrupt and Indonesia could not afford to pay it.

Laksamana did not, however, specify as to how the government
would settle the claim. He said the most important thing was that
the government would negotiate with OPIC in line with its
commitment to honor international contracts.

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

PLN was ordered to pay $572 million by an independent
arbitration board last year but it refused to do so, forcing
Calenergy to call in its OPIC insurance.

The claim paid out by OPIC then became the responsibility of
the host country's government, making the money paid to Calenergy
effectively an Indonesian government debt.

Dow Jones Newswires quoted American documents as saying that
OPIC might have to seize Indonesian assets abroad if the
government failed to settle the claim.

The U.S. ambassador to Indonesia, Robert Gelbard, told Dow
Jones Newswires earlier this week that his government was
"dismayed" at Bambang's assertion that it won't repay OPIC for
the claim paid to Calenergy.

Gelbard argued that the move could affect future investment in
Indonesia just as the four-month-old government was trying to
reassure foreign investors.(udi)