Negotiation between PLN and OPIC to be resumed in NY

Negotiations between state electricity company PT PLN and U.S. federal insurance agency, the Overseas Private Investment Corporation (OPIC), are slated to be continued in New York, the U.S., in August.

The spokesman for the Indonesian Embassy in Washington, Mahendra Siregar, said the negotiations would be continued in New York after negotiations in Jakarta early July could not yet reach a settlement.

"PLN is of the opinion that the value of claims from OPIC is too high because it includes a number of items that are not the responsibilities of PLN such as claims by private insurance group and a number of costs that are incurred by OPIC," Mahendra said.

If the amount of claim could be agreed upon in New York, the Indonesian government would pay out the claim through the Paris Club scheme.

Mahendra also said that the two parties - PLN and OPIC - were also still discussing further OPIC supports on Dieng and Patuha electricity projects that were stopped by the Indonesian government because of the economic crisis.

OPIC -- as a federal insurance firm that guarantees U.S. investment overseas -- asked the Indonesian government last March to pay US$290 in compensation claim that it had paid to California Energy/Mid American Energy Holding.

An international arbitration ordered PLN and the government to pay $500 million to the two U.S. energy investors for the former's decision to cancel the latter's energy projects in Indonesia, Patuha and Dieng. Out of the total claims, $290 was paid by OPIC.

Minister of Finance Bambang Sudibyo said earlier that the Indonesian government would not pay $290 million to OPIC because the government had not allocated any fund pay that claim. Besides, the contracts between PLN and Cal Energy/Mid American Energy Holding were made during the New Order government and tainted by corruption, collusion and nepotism practices. (*)