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)