KBC says Delaware district court orders Pertamina to post $275 M Bond

The US. District Court for the District of Delaware, in a ruling announced Wednesday, upheld a motion by Karaha Bodas Company (KBC), LLC requiring state oil and gas company Pertamina to post a US$275 million bond to satisfy an international arbitral award granted to KBC to resolve a contract dispute between the two companies, KBC press release said.

KBC said the bond, which covers the full amount of the Award, acknowledged KBC?s right to payment and guarantees both a legal avenue and available funds for KBC to secure payment, pending the resolution of legal proceedings in federal courts in New York and Texas.

An international arbitral tribunal granted KBC a US$261 million award in December 2000 as a result of a failed joint venture between KBC and Pertamina. The award was subsequently confirmed by courts in the United States, Hong Kong and Singapore.

Earlier reports also said the US Court of Appeals had recently upheld a freeze on nearly US$275 million of more than $520 million frozen in trust accounts of Pertamina at The Bank of New York and Bank of America.

The freezing of the funds was to follow up on the ruling of Switzerland-based arbitration panel which instructed Pertamina to pay $261 million to Cayman Islands-registered firm Karaha Bodas Company (KBC). The amount was to compensate for the breach of a geothermal power project contract signed in 1994 between Pertamina and state electricity firm PLN, and KBC. KBC is controlled by two U.S. companies namely Florida Power Energy LLC and Caithness Energy LLC.

The Indonesian government suspended the geothermal power project, along with other mega projects, in 1998 shortly after Indonesia was hit by severe economic crisis. The project is located in Karaha Bodas village in West Java. (alex)