KBC loses case to Pertamina

KBC loses case to Pertamina

The Jakarta Post, Jakarta

A Singapore appeal court has ruled in favor of PT Pertamina and
rejected Karaha Bodas Company's claim on the state oil and gas
firm's assets in the latest round of a lengthy legal battle
between the two firms.

The ruling, issued on Wednesday, reinforces a previous ruling
of a lower court in March, Pertamina said in an e-mailed
statement on Thursday.

KBC wanted to seize assets of Pertamina's trading arms --
Pertamina Energy Trading Ltd. (Petral) and Pertamina Energy
Services Ltd. (PES) -- amounting to US$36 million.

"We can refer to this ruling in our defense in other courts,"
Pertamina spokesman Mochamad Harun said.

The legal saga of Pertamina and KBC involved the former
challenging asset freeze orders requested by the latter in U.S.,
Canadian, Hong Kong, Singaporean and Indonesian courts.

KBC was one of 27 independent power producers whose projects
were terminated by the government -- as recommended by the
International Monetary Fund -- following the 1997 economic
crisis.

The company, which signed a contract with Pertamina on the
project, filed a lawsuit with an international arbitration court
against Pertamina for breach of contract.

The Swiss-based arbitration court ruled in 2000 favor of KBC,
ordering Pertamina to pay the firm $261 million. A U.S. court
upheld the ruling and ordered Pertamina to pay $291 million in
compensation, which has since risen to over $300 million due to
interest accrued.

As Pertamina refused to pay the compensation, in August 2002,
a U.S. district court froze $285 million, belonging to the
government of Indonesia and Pertamina, deposited in the Bank of
America and the Bank of New York.

KBC is owned by private U.S. firms Caithness Energy LLC and
Florida Power and Light Co., in addition to local firm PT Sumirah
Daya Sakti.

The governmentis still trying to seek an out-of-court
settlement with KBC.