Partner blasts CalEnergy for filing arbitration lawsuit

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)