Govt issues decree to continue Karaha Bodas power project

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has officially issued a decree to allow the resumption of the Karaha Bodas power project which has been suspended since late 1997 as part of the government?s retrenchment program to cope with the country?s worst ever financial crisis.

The minister?s decree No. 216K/31/Mem/2002 on the resumption of the geothermal power project was issued on March 22 after being approved by President Megawati Sukarnoputri, Koran Tempo reported on Saturday.

The spokesman for the ministry of energy and mineral resources, Nurwinakun, said in Jakarta on Friday that with the minister?s new decree, the Karaha Bodas geothermal power project could be continued.

The Karaha Bodas project is one of dozens of mega projects which were suspended by the government after the financial crisis hit the country in late 1997. The government, however, revoked the decision in 1998 after protests from developers, Caithness Energy, Florida Power, Japan Tomen Power and their local partner PT Sumarah Daya Sakti. But in early 1998, the government again issued a decree to resuspend the project.

Not happy with the decision, the developers then sued Pertamina on the behalf of the government through the International Arbitrary Agency, which then issued a ruling in favor of the Karaha Bodas developers. Pertamina was asked to pay a compensation of US$261 million but the state-owned oil and gas company refused to settle the payment.

Purnomo earlier said that the government was trying to settle the dispute between Pertamina and the Karaha Bodas developers through an out of the court settlement. For this purpose, the government issued a decree allowing the continuation of the project, he said. (*)