MIGA covers RI risk

MIGA covers RI risk

WASHINGTON (Dow Jones): The Multilateral Investment Guarantee Agency, MIGA, will resume providing political risk insurance coverage for foreign direct investment in Indonesia, MIGA said in a press statement on Wednesday.

MIGA, part of the World Bank, decided to offer the insurance after the Indonesian government agreed to reimburse MIGA for a $15 million insurance claim paid out to Enron on a canceled power project last year.

"Indonesia's economic environment has shifted significantly since Enron entered into this venture, and the project was caught up by larger forces in the country's power sector that affected other sponsors and insurers as well," Luie Dodero, MIGA's general counsel and World Bank Group vice president.

"While we understand the circumstances that led to the project's suspension, international law dictates that the cancellation be compensated," Dodero said.

The claim was the first ever for MIGA. The project involved a 500-megawatt power plant near Surabaya, Indonesia, one of many suspended by presidential decree in 1997 in response to the country's economic crisis.