U.S. rejects RI request over Karaha Bodas case

A'an Suryana, The Jakarta Post, Jakarta

The U.S. government had rejected the Indonesian government's request to intervene in U.S. court hearings into the dispute between state oil and gas company Pertamina and independent power producer Karaha Bodas Company (KBC), a top government official said on Monday.

However, the U.S. government was ready to help Indonesia by facilitating an out-of-court settlement to resolve the high- profile case, said Minister of Energy and Mineral Resources Purnomo Yusgiantoro at a hearing with House of Representatives Commission VIII for energy and mineral resources, environment, science and technology.

Purnomo said Indonesia had asked the U.S. government to issue a "statement of interest" to the U.S. courts currently hearing the case. However, the request has been turned down on the grounds that the U.S. governmental system separates executive from judicial power.

He did not provide details about the "statement of interest", but the U.S. government sometimes issues a statement to the courts stating the disputes being examined by the courts could affect the U.S. interest. In that way, the U.S. government can influence court decisions.

Purnomo said Indonesia accepted the U.S. government's offer to facilitate an out-of-court settlement, saying it was still an opportunity for Pertamina and KBC to resolve the case.

Purnomo said the geothermal power project in Telaga Bodas, West Java, which has been abandoned by KBC for years, was still feasible for development.

The latest due diligence examination by an independent party stated the geothermal power plant project could be developed to generate 30 megawatts to 200 megawatts of power, he said.

The project was suspended, along with dozens of other power projects, by former president Soeharto's government in 1998 as part of an agreement with the International Monetary Fund, which called for a retrenchment program in the country to cope with the economic crisis.

However, KBC filed for arbitration against Pertamina, with whom it had signed a development contract. The panel of arbitrators in Geneva ruled in favor of KBC, ordering Pertamina to pay compensation to KBC.

Following the arbitration ruling, KBC filed numerous lawsuits in the U.S., Canada, Singapore and Hong Kong to confiscate Pertamina's assets in those countries, seeking a staggering US$261 million in compensation.

Last year, a Texas court handed down a verdict in favor of KBC, allowing KBC to seize an account in a U.S. bank, which was believed to belong to Pertamina.

However, Pertamina appealed to the higher court, where the hearing is still in progress.