MidAmerican relies on $290m insurance policy

MidAmerican relies on $290m insurance policy

CHICAGO (Dow Jones): MidAmerican Energy Holdings Co. (MEC) said Thursday that it won't take a US$285 million charge as a result of failed investments in Indonesian power plants.

Though MidAmerican received a favorable judgment late Tuesday of $575 million against the Indonesian Ministry of Finance from an international panel that reviewed the case, the company doubts it will see a payment as a result.

That means MidAmerican would instead rely on an international insurance policy it took out before the projects began. The $290 million policy covers the company's investments, a spokeswoman said.

"We hope that they would cut a check right now, but they haven't," said Robert S. Silverman, president of CalEnergy International Inc., the MidAmerican subsidiary that has oversight of the Indonesian projects. "We're still hopeful about the process, but we've already filed with the insurers."

MidAmerican spokesman Kevin Waetke said the company had no immediate comment about any impact on future earnings.

Two MidAmerican subsidiaries, Himpurna California Energy Ltd. and Patuha Power Ltd., were awarded contracts to build and operate power plants in Indonesia in 1994. But after the country's economy collapsed in 1997, the Indonesian government forced the two companies to suspend development.

The insurance policy is from the Overseas Private Investment Corp., a U.S. agency that protects assets of U.S. companies in foreign countries.

The matter is expected to be resolved by the end of the year, Waetke said.

In 1997, the company reported an $87 million initial charge related to the Indonesian plants.