Pertamina to fight asset seizure
Fitri Wulandari, Jakarta
PT Pertamina said it will take legal action to counter a Hong Kong court's decision to temporarily freeze its overseas assets following a prolonged dispute between the state oil and gas company and U.S.-based power company Karaha Bodas Company (KBC).
Alfred Rohimone, Pertamina's finance director, said the court has approved a temporary seizure of Pertamina's assets in Hong Kong, including those belonging to Pertamina Energy Trading Ltd, or Petral (a trading company owned by Pertamina), Tugu Insurance, and Kipco (Korea Indonesia Petroleum Company Ltd).
The court also ordered Petral to pay its revenue from May 2002 to date to KBC.
"We are preparing lawyers. The assets should not be seized as the U.S. court has ruled that Pertamina should pay the arbitration award to KBC," Alfred told reporters on Wednesday after a hearing with the House energy commission at the House of Representatives.
Alfred said the court order would be effective for 23 days from July 23.
KBC has demanded that Pertamina pay US$15 million plus $1 million in fees if the former is to drop the lawsuit against Pertamina in Hong Kong.
Alfred declined to comment on whether Pertamina would accept the settlement offered by KBC.
However, he acknowledged that the seizure would affect the company's imports of crude and oil-based products as 60 percent of the company's imports are carried out by Petral.
KBC was one of 27 independent power producers (IPPs) whose projects were terminated by the government following the economic crisis in the late 1990s. KPC at the time had a joint geothermal power operation contract with Pertamina.
A Swiss arbitration court ruled in 2000 that Pertamina must pay compensation to KBC for the termination of the project. Pertamina challenged the arbitration ruling in courts in the U.S., Canada, Hong Kong and Singapore.
But early this year, a U.S. court rejected Pertamina's appeal against the arbitration award.
A U.S. court has frozen Pertamina accounts in the Bank of New York and Bank of America that held royalties from overseas oil and gas sales. The court agreed to release part of the government's share of revenue but retained Pertamina's share, which is actually equal to the arbitration award of US$ 291 million plus interest.
Pertamina's president director Ariffi Nawawi said that the company was also seeking an out-of-court settlement to minimize state loses.
Sidebar
Govt to reimburse subsidy spending
Director General of Financial Institutions at the Ministry of Finance Darmin Nasution said the government would immediately provide funds to Pertamina so that it could carry out its fuel importation plan.
He said that the reimbursement of the fuel subsidy spending undertaken by Pertamina should be enough to finance the fuel imports.
"Pertamina does not need a government guarantee. The best solution is to improve the company's liquidity," he said on Wednesday.
Pertamina had earlier asked for a government guarantee to allow the company to secure bank loans for fuel imports due to cash flow problems as the government had not reimbursed the fuel subsidy spending, estimated at about Rp 12.9 trillion for the period from January to June of this year. -- JP