Karaha Bodas claim amount rises to $290 million

State-owned oil and gas company PT Pertamina has to pay more money to U.S. power producer Karaha Bodas Company (KBC) as the original claim of US$261 million has now jumped to $290 million.

Originally, the Geneva arbitration said that Pertamina must pay $261 million as compensation to KBC, but with interest that amount rose to $290 million, said Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Tuesday.

According to Purnomo, the government has several options to settle the case. One option will be trying for the release of frozen money belonging to the government in the U.S.

?It?s not necessary to release all the money, we still will give $290 million as a guarantee in the U.S. But the remaining amount must be released as the New York court had already said the frozen money belonged to the government,? Purnomo said after witnessing the signing of gas contracts in Jakarta.

The minister said that giving guarantee which is equivalent to the claim is not the sole option. This has to be discussed further.

?So, giving guarantee is not the only way, because there are other alternatives. Therefore, there will not be any misunderstanding,? Purnomo said.

Earlier, Pertamina asked the government to pay $261 million claim to KBC in accordance with the court?s judgment.

Because, all the efforts including legal as well as diplomatic have failed to change the arbitration?s decision.

The Geneva court has ordered Pertamina to pay $261 million in compensation to KBC for canceling a joint power plant project during the financial crisis.

But Pertamina said the project was only worth of $111 million and it was ready to pay the same amount. The KBC rejected Pertamina?s offer.

Pertamina and KBC had met in the U.S. last week but they failed to reach an agreement on the settlement of the issue.

Moreover, several bank accounts belonging to Pertamina in the U.S. were frozen by courts.

Currently, Pertamina is struggling to get back the frozen $650 million from its 12 accounts in the U.S. banks. Though the New York Court had ordered the banks to return the money to Pertamina, it has not received the money so far.

Pertamina says the money in the frozen bank accounts is belonging to the government. (*)