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.