Pertamina to appoint auditor on Karaha assets

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