Legislators urge govt to launch counter-attack against Karaha

House members have urged the government to not easily give in to pressures from Cayman Islands firm Karaha Bodas Company (KBC) over a suspended West Java geothermal power project.

The government should instead bring up its case to international panels dealing with corruption cases, the legislators said on Thursday.

According to the House members, KBC?s involvement in the West Java power project during the era of former authoritarian president Suharto smacked of corruption.

The legislators made these remarks on Thursday in response to the government?s determination seek out of court settlement over its dispute with KBC which had won an US$261 award from a Switzerland-based arbitration panel against state oil and gas company Pertamina.

Hongkong and Singapore courts were reported to confirm recently the Swiss arbitration panel?s rulings, a few months after a U.S. court handed down a similar verdict. Pertamina?s assets were believed to be kept at banks in those countries.

Husni Thamrin from the House commission in charge of energy and mineral resources said the US$261 million was too big amount. If the government decides to pay the amount to KBC, the Indonesian people would experience even more serious economic difficulties.

?So the government should act against the arbitration decision by filing a suit against Karaha in an international anti-corruption panel,? Husni, from United Development Party (PPP), told reporters.

Another legislator from the same commission, Priyo Budi Santoso said the government should press the International Monetary Fund (IMF) to also take responsibility for the suspension of the Karaha Bodas project. The government decision to suspend Karaha Bodas project and many other mega projects in 1997, amid the economic crisis, had been based on recommendations from the IMF, Priyo argued. He is from Golkar Party.

Meanwhile, Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said recently seeking out of court settlement over the Karaha case does not automatically mean that the government is willing to follow the Swiss arbitration panel?s rulings.

Dorodjatun implies that out of court settlement could enable Pertamina and KBC to find solutions acceptable to Indonesia.

In another development, the US Court of Appeal on Thursday upheld a freeze on nearly $275 million more than $520 million frozen in trust accounts of Pertamina. KBC?s lawyers said the court rulings took it a step closer to secure payment.

Karaha Bodas Company is primarily owned by U.S. companies Florida Light and Power and New York-based Caithness Energy. (Godang)