Pertamina to appoint auditor on Karaha assets

State-owned oil and gas firm Pertamina would appoint an independent auditor to value the assets of independent power producer (IPP) Karaha Bodas Co. LLC as part of efforts to resolve the multi-million dollar dispute between the two firms, according to Pertamina president Baihaki Hakim.

Baihaki said the independent auditor would work for maximum period of six months.

"We will appoint (the auditor) to appraise Karaha's assets, its potential reserves...," he told reporters after the signing ceremony of Memorandum of Understanding (MoU) between Pertamina and the National Police on curbing fuel smuggling.

Karaha, majority of which is owned by U.S. firms Florida Power Energy LLC and Caithness Energy LLC, is in a heated dispute with Pertamina over an alleged breach of contract.

The Switzerland-based arbitration panel has ruled Pertamina to pay some US$261 million in compensation to Karaha, whose geothermal power project in West Java was suspended by the government in late 1990s during the country's economic crisis.

Pertamina, which signed the power project contract with Karaha in 1994, has so far declined to pay the compensation.

A U.S. court, at the request of Karaha, has frozen some $200 million deposited at Bank of America and Bank of New York by Pertamina. -- JP