Partner blasts CalEnergy for filing arbitration lawsuit
JAKARTA (JP): The Association of Retired Officers Businesspeople (Himpurna) blasted on Monday CalEnergy Company Inc of the United States, its partner in the Dieng geothermal power project in Central Java, for filing an arbitration suit against state electricity company PT PLN and the Indonesian government.
Himpurna's vice chairman Ishak Odang said CalEnergy's move took the association by surprise since it was taken without prior consultation with it as its partner.
CalEnergy's suit has put Himpurna in an awkward position and jeopardized its good name in business circles as well as among government agencies, Ishak said in a letter sent Monday to CalEnergy Company Inc's chief executive officer David L. Sokol and CalEnergy Asia president and chief operating officer Donald M. O'Shei, a copy of which was made available to The Jakarta Post
Copies of the letter were also sent to Minister of Mines and Energy Kuntoro Mangkusubroto, Minister of Finance Bambang Subianto, U.S. Ambassador to Indonesia Stapleton Roy, and PLN president Adhi Satriya.
Ishak said that instead of filing an arbitration suit, CalEnergy would do better by solving its dispute with PLN in a much more desirable manner through renegotiating its contract with the state company.
CalEnergy and Himpurna own 88 percent and 12 percent stakes respectively in Himpurna California Energy (HCE), the owner of the 400-Megawatt (MW) Dieng power plant.
The company has been operating the first unit of the plant with the power generation capacity of 60 Megawatt (MW) since March, but it said PLN had not made a single payment for the power supplies. Monthly power supplies from the plant cost between US$4.5 million and $5 million.
The situation prompted CalEnergy to file an arbitration suit against PLN and the Indonesian government, as the guarantor of the power purchase agreement between PLN and CalEnergy, on Aug. 14 at the United Nations Commission on International Trade Law (UNCITRAL) in Washington D.C., U.S.A.
CalEnergy has also two other geothermal power projects, in Patuha, Central Java, and Bedugul, Bali, but both projects have been canceled by the government as part of the retrenchment effort to cope with the monetary crisis.
In a related development, a group of 23 local contractors announced on Monday that they had failed to settle their dispute with CalEnergy over payment for the materials and services provided by them to the company's power projects in Dieng, Patuha and Bedugul.
The contractors said last week that CalEnergy had missed the payment deadline for their goods and services amounting to $40 million in value.
In response to the complaint, CalEnergy's vice president for Indonesia Frederick L. Manuel said in a statement on Thursday that his party was ready to discuss its dispute with the contractors.
However, the contractors, who visited HCE's office on Monday, said that they failed to recover their money because HCE maintained it would not pay its debt until PLN paid it for its power supplies from the Dieng power plant. (jsk)