Hexindo ordered to pay damages to SPE over Lemang PSC dispute

By Romel S. Gurky

SGX-listed Ramba Energy Limited announced Thursday that the Singapore International Arbitration Center (SIAC) has made a partial final award pursuant to the arbitration proceedings launched by Super Power Enterprises Group Ltd. (SPE) against the firm's Indonesian subsidiary PT Hexindo Gemilang Jaya.

Ramba said in a statement that the partial final award pursuant to the arbitration was made by the tribunal on August 1, 2016.

The tribunal has, interalia, reduced the damages from SPE initial claim of US$218 million to approximately $13 million and ordered, inter alia, the following:
(a) that Hexindo shall pay SPE the sum of $12,984,963.00 within 30 days from the date on which the Award is made;
(b) that Hexindo shall pay SPE interest on the sum awarded to SPE at LIBOR +3 percent compounding monthly for the period from August 26, 2011 to the date on which the Award is made;
(c) that for SPE?s legal fees, Hexindo shall pay SPE the sum of GBP 656,060.40 within 30 days from the date on which the Award is made;
(d) that for SPE?s disbursements, Hexindo shall pay SPE the following sums within 30 days from the date on which the Award is made:
a. GBP24,895.43;
b. US$74,391.00;
c. S$8,540.00; and
(e) that if the amount outstanding under the Award is not paid within 30 days from the date on which the Award is made, Hexindo shall pay SPE interest on that amount at 5.33 percent per annum starting 30 days from the date of the Award until the sum awarded to SPE is satisfied.

As has been previously reported, Hexindo and SPE entered into a contractual joint venture established under a joint operating agreement (JOA) on October 13, 2009. Under the JOA, Hexindo and SPE each held a 51 percent and 49 percent participating interests in the Lemang PSC respectively.

The arbitration notice is in relation to a claim by SPE over the forfeiture of its 49 percent participating interest in the Lemang PSC by the government of Indonesia (GOI) more than three years ago which resulted in its eventual substitution by a third party, Eastwin Global Investments Limited, as owner of the said 49 percent participating interest in the Lemang PSC.

The Lemang block is located in the northern most part of the hydrocarbon-rich South Sumatra basin, a proven region for oil and gas production with transportation infrastructure already in proximity. Located approximately 300 kilometers from Singapore, the Lemang block is ideally situated for oil and gas distribution to regional markets.

Editing by Reiner Simanjuntak