State budget under threat as BoA blocks funds
State budget under threat as BoA blocks funds
Moch. N. Kurniawan, The Jakarta Post, Jakarta
The state budget is once again under serious threat after the
Bank of America (BoA) froze more than US$130 million worth of
funds assumed to belong to state-owned oil and gas firm
Pertamina.
Pertamina's finance director Ainun Naim said the funds, coming
from the sale of liquefied natural gas (LNG), crude oil and other
oil-based fuel products, actually belonged to the government as a
source for financing the state budget.
"Now, Pertamina is continuing efforts to appeal to the U.S.
court to release the funds."
"The court must release the funds as they don't belong to us,
but to the government," he told The Jakarta Post., adding that
the next trial would be held in April.
Oil and gas revenue is one of Indonesia's main income
earners.
Under a U.S court order, the BoA has frozen the funds on the
request of Pertamina's former partner, independent power producer
(IPP) Karaha Bodas Co. LLC., as part of efforts to collect some
$261 million in compensation from Pertamina.
The Switzerland-based arbitration court ruled in December 2000
that Pertamina and the state-owned power firm PLN pay
compensation following the suspension of Karaha's power project
in West Java in 1998 amid the country's economic crisis. But the
arbitration opined in favor of the government, saying it was not
a party which signed the power contract.
The U.S. federal court in Texas confirmed the ruling.
But instead of paying the compensation, Pertamina made an
appeal at the local court to annul the arbitration ruling.
The government also issued a new decree allowing Karaha to
resume the project. But Karaha has turned down the offer.
Ainun criticized Karaha's stance, saying that Karaha should
emulate other foreign investors who agreed to renegotiate the
contract of their power projects.
"If many of the IPPs agreed to renegotiate, why is Karaha
not?", he asked.
So far, seven of 27 IPPs have completed the renegotiation with
PLN.
Karaha is mainly controlled by American firms Florida Power
and Caithness.