Payment of OPIC claim will not solve the problem: Purnomo

The government's decision to pay the US$260 million claim from the Overseas Private Investment Corporation (OPIC) would not solve the problems surrounding the disputed Patuha (West Java) and Dieng (Central Java) geothermal-powered power plants, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Purnomo said in his letter dated April 20, 2001, addressed to Coordinating Minister for the Economy Rizal Ramli, a copy of which was seen by Kompas daily, that the payment of OPIC claim was not the only claim addressed to state electricity company PT PLN over the government's cancellation of the Dieng and Patuhan planta.

There is also a claim of US$140 million coming from the creditors of Patuha and Dieng power plants, respectively belonging to Patuha Power Limited (PPL) and Himpurna California Energy (HCE). The claim is currently being negotiated by PLN and the government.

In addition, PPL and HCE are currently involved a court battle with state oil and gas company Pertamina, over the final award from the international arbitration.

Pertamina filed its case against PPL and HCE with the Central Jakarta District Court and demanded the court to cancel the final award by the international arbitration panel over the Patuha and Dieng, and Pertamina won the first trial over the case, in which the district court ordered PPL and HCE to pay distress payment to Pertamina US$1 million a day. The total claim currently stood at US$350 million.

Over the Central Jakarta District Court verdict, PPL and HCE appealed to the Jakarta High Court.

Purnomo said the government, in this case Rizal Ramli as the chairman of the electricity restructuring team, popularly known as Keppres 133/2000 team, to listen the suggestion from PLN that calls on the government to delay the payment of OPIC claim until all legal disputes over Dieng and Patuha are settled, including the dispute between Pertamina and PPL, HCE.

Purnomo also noted that the demand by OPIC to settle the problem through the settlement note mechanism should be rejected because it would burden the government, and at the same time, it would not solve the problem once and for all.

With the settlement note, OPIC demanded the government pay US$350,000 per month since April 3, 2001 to compensate the operating costs of the Patuha and Dieng, until the government takes over the assets of both power plants. The amount of money should be paid by the government on top of the $260 million claim.

Earlier, Finance Minister Prijadi Praptosuhardjo had also called on Rizal Ramli, through his letter dated also in April, to reject the settlement of the Patuha and Dieng power projects problems through the settlement note.

Purnomo had also asked PLN to demand additional terms should the government proceed with the payment of the OPIC claim. But Prijadi did not disclose what the additional terms that should be included.

Following pressure from OPIC and the U.S. government, Rizal Ramli issued a letter on May 1, stating that the government agrees to pay the $260 million claim to OPIC. The payment should be pursued through the Paris Club mechanism. (*)