Finance minister demands review of OPIC claim payment agreement

Minister of Finance Prijadi Praptosuhardjo said his office would propose to state electricity company PT PLN to review the government's decision to pay the $260 million claims to the Overseas Private Investment Corporation (OPIC) by inserting conditions to the payment of the claim.

Nevertheless, Prijadi said that the insertion of conditions to the claim payment would not change the government's decision to pay the claim, as already mandated by Coordinating Minister for the Economy Rizal Ramli.

"Yes, that's already (final). We will only review it by proposing to PLN to demand additional conditions to the payment," Prijadi said, adding that the additional conditions should be included in the agreement to settle the claim through a settlement note, that he himself disagreed with.

But Prijadi did not disclose what conditions should be inserted in the settlement agreement.

Nevertheless, in his letter dated April 24, addressed to Rizal Ramli as the chairman of the electricity restructuring team, popularly known as Keppres 133/2000 team, Prijadi detailed his proposal for the inclusion of additional clauses in the settlement agreement.

One of the clause should stipulate that the signing of the settlement agreement would automatically nullify the verdict by international arbitration panel, that also involved the Central Jakarta District Court. And therefore, with the signing of the settlement agreement, the government may not be taken into any court in the world for the same case.

Prijadi also demanded that following the payment of the OPIC claim, the government may not be liable to any other claim, and the assets of the disputed Dieng (Central Java) and Patuha (West Java) geothermal-powered power plants must be transferred to the government immediately upon the first payment of the claim.

Prijadi also explained his disagreement with the use of settlement note mechanism to settle OPIC claim because it brought some implications to the government. First, the settlement note would not solve the problem of other claims for the disputed projects.

And even if the government agreed with the settlement note, Prijadi suggested that the government settle all Patuha and Dieng problems with their creditors, and this must be completed by the end of this year.

Prijadi, nevertheless, proposed that the settlement note mechanism be communicated to and discussed with the House of Representatives before it is signed by the government.

Meanwhile, the director general of budgets, Anshari Ritonga, said that he had not yet been officially notified about the government's decision to pay the OPIC claim, and therefore, he had not yet allocated any fund from the budget for the claim.

"Even if it is later decided that the payment should come from the budget, I still don't know where we would get the fund from," he said.

Separately, Minster of Energy and Mineral Resources Purnomo Yusgiantoro said that the payment of the OPIC claim would not burden the budget because it would be pursued through the Paris Club mechanism.

As it is using Paris Club terms, Purnomo said, the payment of the claim would be spread to between 10 years and 15 years, with a grace period of 5 to 6 years.

With that 5 to 6 years grace period, the government could raise the needed fund by selling electricity from the Dieng project that is actually ready to produce 60 megawatts of electricity.

"If we can simplify the problem, then there is 60 megawatts in Dieng. If the assets are sold, we will get the proceeds, from which we could pay OPIC claim in the next five years," Purnomo said. (*)