Pertamina to regain part of frozen funds at BoA

Pertamina to regain part of frozen funds at BoA

Fitri Wulandari, The Jakarta Post, Jakarta

State-owned oil and gas company Pertamina said on Tuesday a U.S.
court had issued a ruling that would allow it to recover part of
the some US$520 million currently frozen by Bank of America (BoA)
at the request of power producer Karaha Bodas Co. LLC.

Pertamina legal counsel Simson Panjaitan said that in its
injunction on June 18, the District Court of New York ordered
Bank of America to freeze only $275 million of the funds, until
the court delivered its final ruling.

"The rest of the funds can be released," Simson said, adding
that the U.S. court was expected to deliver its final verdict in
early September.

The funds were revenue from the sale of liquefied natural gas
(LNG), which is an important source of revenue for the state
budget.

Karaha Bodas asked Bank of America to freeze the funds in a
bid to collect an outstanding payment from Pertamina, after a
Switzerland-based arbitration panel ruled in favor of the
independent power producer in a long-running dispute over a power
purchase contract.

Pertamina has said that the funds belong to the government.

According to Simson, the $275 million still frozen by Bank of
America consists of a $261 million arbitration award plus
interest that the arbitration panel ruled Pertamina must pay
Karaha Bodas.

Pertamina and Karaha Bodas have been entangled in a serious
legal battle here and in the U.S. following the government's
decision to suspend the Karaha geothermal project in West Java in
1998.

Karaha, which is principally controlled by two U.S. companies
-- Florida Power Energy LLC and Caithness Energy LLC -- filed a
complaint with the Switzerland-based arbitration panel, which
ruled in its favor in 2000.

Pertamina was ordered to pay Karaha some $261 million in
compensation. Karaha claimed it had invested $100 million in the
project before it was suspended.