Govt still expects Karaha Bodas Co to resume W. Java power project: Official

The government will offer other investors to develop the Karaha Bodas geothermal power plant in West Java only when Karaha Bodas Co decides not to continue the project, a senior government official said on Tuesday.

?We will continue offering Karaha Bodas Co to continue the project. But if it does not want to resume it, we shall offer it to other investors,? Roes Aryawijaya, deputy to the State Minister of State Enterprises, told reporters on the sidelines of a seminar on geothermal.

Roes added he expected state oil and gas firm Pertamina and state power company PLN to develop the power plant if no investor is interested in it. The project is located in Karaha Bodas District in West Java.

Pertamina and Karaha, which is principally controlled by two U.S. companies Florida Power Energy LLC and Caithness Energy LLC, are currently involved in a legal dispute over a breach of contract.

Karaha filed complaints to a Switzerland-based arbitration panel after the Indonesian government in 1998 unilaterally suspended a number of power projects including the Karaha project in the wake of the country?s economic crisis. Karaha claims it had invested some $100 million in the project which had been signed in 1994 with Pertamina and PLN.

The arbitration panel in 2000 ruled in Karaha?s favor, ordering Pertamina to pay it some $261 million in compensation.

Based on the arbitration ruling, a U.S. court this year issued a ruling instructing Bank of New York and Bank of America to freeze some US$200 million in funds believed to belong to Pertamina, which the Indonesian firm claims to belong to the Indonesian government. The court ruling followed the verdict of the Switzerland-based arbitration panel.

Meanwhile, a Jakarta court recently issued an injunction ordering Karaha to stop its efforts to seize Indonesian assets, upon Pertamina?s request. (Godang)