OPIC settlement agreement signed Rizal Ramli annulled

Finance Minister Boediono revealed that the government signed on Monday a new settlement agreement with U.S. Overseas Private Investment Corporation (OPIC) that automatically annulled the controversial similar agreement signed by Boediono's predecessor, Rizal Ramli.

Kompas daily quoted Boediono as saying that the new agreement differed with the one signed by Rizal, saying that the new agreement was similar with the one signed by Rizal's predecessor Prijadi Praptosuhardjo.

The new agreement also had better terms, including the repayment schedule that used a scheme comparable with the Paris Club.

With the new agreement, OPIC is also required to seek financing sources to finance the commissioning of the 60-megawatt geothermal power plant in Dieng, Central Java.

Following the signing of the settlement agreement, the Ministry of Finance said that both parties -- the government and OPIC -- also signed the Re-commissioning Loan Agreement and Note to finance the completion of the half-way Dieng power plant.

OPIC then issued OPIC Support Letter to cover political risks for the stalled Dieng power plant.

To follow up all the new development, state oil and gas company Pertamina and state electricity company PT PLN plan to establish a joint venture company to manage the Dieng power plant.

The new company would also be responsible to pay claims the project's obligations, including debt to lenders totaling $140 million. (*)