Govt must pay KBC claim: Laksamana

The government has no choice. The U.S. energy company Karaha Bodas Company's (KBC) claim worth of hundreds of millions of dollars must be paid, the Koran Tempo newspaper said in a report on Monday quoting a minister as saying.

State Minister for State Enterprises Laksamana Sukardi said the government must honor the decision of international arbitration.

“If not committed (to the arbitration’s decision), the global community will put us at a distant place,” Laksamana told the Koran Tempo over the weekend.

However, state-owned oil and gas company PT Pertamina chief commissioner emphasized that the police must go ahead with the process of investigation into the alleged corruption case in the KBP power project.

“There is a need for police to solve this case,” he said.

When asked about the truth regarding National police chief Gen. Da’i Bachtiar’s request to the government not to pay the claim amount to KBC because the criminal proceedings are under progress, Laksamana did not reply directly and he just said: “I think it will be the police’s right.”

Pertamina and the Indonesian government have been involved in a protracted legal battle with KBC over the suspension by the Indonesian government in 1998 of KBC's geothermal power project in Karaha Bodas, West Java.

The Geneva panel of arbitrators in 2001 ordered Pertamina to pay $261 million in compensation to KBC for the power project suspension, which Pertamina and the Indonesian government refused to follow on the grounds that it was an overly big amount.

The compensation amount soared to $294 million on interest charges. (*)