Tue, 01 Aug 2000

OPIC claim needs DPR approval: Government

JAKARTA (JP): The government needs approval from the House of Representatives to settle an outstanding US$290 million claim made by the U.S. government's Overseas Private Investment Corp. (OPIC), Minister of Finance Bambang Sudibyo said on Sunday.

Bambang said approval from the House was necessary to settle the claim because the amount was too high and payment of it could affect the state budget.

"What is clear is that I don't have the authority to settle a claim for such an amount," Bambang told The Jakarta Post on a flight back from Manado, North Sulawesi.

The minister visited several cities around the country last week to dispense information on the planned implementation of regional autonomy.

U.S. Ambassador to Indonesia Robert Gelbard earlier said the negotiations between OPIC and state electricity company PT PLN on the claim were proceeding too slowly and that his government was losing patience.

Gelbard said the U.S. government might seize Indonesian state assets if PLN kept refusing to pay the claim.

"Go ahead and threaten us. You will not deal with me but with the state," Bambang said when asked for comments on Gelbard's statement.

OPIC's claim follows PLN's inability to pay independent power producer MidAmerican Energy Holding, formerly known as CalEnergy, $572 million in compensation as ordered by an independent arbitration panel.

In September 1998, MidAmerican filed arbitration proceedings against PLN after it refused to pay for electricity from MidAmerican's geothermal power plant in Dieng, Central Java, and after the government also suspended MidAmerican's power plant in Patuha, West Java.

PLN lost the arbitration proceedings last year and was ordered to pay MidAmerican $572 million in damages.

PLN refused to pay the claim. This forced MidAmerican to call in its OPIC insurance.

According to Gelbard, OPIC paid MidAmerican the largest claim in its history.

Legislator Priyo Budi Santoso of the Golkar Party said he would block any plans by the government to pay OPIC's claim, citing alleged corruption, collusion and nepotism in MidAmerican's contracts with PLN.

The power purchase contracts were signed by PLN with MidAmerican's subsidiaries Himpurna California Energy Ltd. (HCE) and Patuha Power Ltd. (PPL) during the administration of former president Soeharto.

HCE is a joint venture between MidAmerican and PT Himpurna Enersindo Abadi, a company founded by Indonesian Military veterans. PPL is a joint venture between MidAmerican and local company Mahaka Energy, which is owned by a son-in-law of a minister during the New Order era.

Priyo noted MidAmerican's subsidiaries had yet to fully pay several local companies for their drilling services in their geothermal projects.

"If the U.S. government seizes our assets, then we will seize their assets here," said Priyo who is a member of House Commission VIII for environmental, science and technology affairs.

PLN president Kuntoro Mangkusubroto said negotiations were proceeding smoothly, with the next round to be held in New York.

He also confirmed that OPIC had agreed to reduce its claim, but he refused to provide details. (bkm)