House to reject planned payment of OPIC claim
Tuesday, October 17 2000 - 04:00 AM WIB
The House of Representatives will reject the government's plan to settle US$290 million claims from Overseas Private Insurance Corporation (OPIC) because the government has no money to pay the claim, according to the House's Commission IX chairman Benny Pasaribu.
Benny said that the government must get the House's approval to pay US$290 million to OPIC, a U.S. Federal insurance provider. And the House would not give its approval for the government to settle the claim, he added.
He contended that the government's financial situation was no better now. He noted that even to pay interests of its bonds, the government had to borrow.
He said he was concerned over the government's and state electricity company PT PLN's promise to pay OPIC claim.
OPIC's claim follows PLN's inability to pay independent power producer MidAmerican Energy Holding, formerly known as CalEnergy, $572 million in compensation as ordered by an independent arbitration panel.
In September 1998, MidAmerican filed arbitration proceedings against PLN after it refused to pay for electricity from MidAmerican's geothermal power plant in Dieng, Central Java, and after the government also suspended MidAmerican's power plant in Patuha, West Java.
PLN lost the arbitration proceedings last year and was ordered to pay MidAmerican $572 million in damages.
PLN refused to pay the claim. This forced MidAmerican to call in its OPIC insurance.
OPIC then demanded PLN to pay $298 million, but then after negotiations, it agreed to reduce the claim to $290 million. But PLN still wanted OPIC to cut further the claim. (*)