Govt to negotiate with OPIC over energy dispute

State Minister of Investment and State Enterprises Development Rozy Munir said that he and other economic ministers had discussed demands from the Overseas Private Investment Corporation (OPIC) for the due payment of $217 million in penalties over its decision to cancel the Karaha Bodas and Dieng Patuha power plants.

Rozy acknowledged that the U.S. ambassador in Jakarta had sent letters to the government, asking quick resolution to the problem.

He said that the government would negotiate the matter with OPIC delegations who were due in Jakarta this week, and ask possible reduction and rescheduling of the payment as the government was facing financial constraints.

"That problem is handled by a committee established under presidential decree No. 166/1999, that is led by the coordinating minister of economy, finance and industry, minister of of mines and energy, minister of finance, state minister of investment and state enterprises development and the foreign minister," he said.

"What certain is that the government will negotiate (with OPIC) to seek good possibilities or loopholes," he said.

He said the government would respect international agreements, but at the same time, it was also probing the possibility of corruption, collusion and nepotism, or locally known as KKN, in the process of awarding the contract to American Mid Cop. (CAL Energy) that partnered with cronies of former president Soeharto.

OPIC won its case against the government in an international arbitration over Karaha Boda Dieng Patuha power plants. The arbitration awarded OPIC US$290 million, of which $72.5 million had been paid by a syndication of insurance firms led by Diioyd Insurance. OPIC demanded the remaining $217 from the government. OPIC had actually given a deadline of June 20 for the government. Otherwise, it would ask the U.S. court to confiscate Indonesian assets in the U.S. (*)