Pertamina asked to conduct due diligence over Karaha's $261 million award
Thursday, May 9 2002 - 04:28 PM WIB
?We have asked Pertamina to undertake due diligence, and we will take measures based on due diligence results,? Purnomo told reporters. He provided no details.
Purnomo said Pertamina might involve Finance and Development Supervisory Agency (BPKP) in the due diligence when necessary. It would not use any other auditor for the work, the minister said.
A Switzerland-based arbitration panel in 2000 ordered Pertamina to pay Karaha some $261 million in compensation for the suspension by the Indonesian government of its geothermal electric power project in Karaha Bodas, West Java. The project suspension occurred in 1998 at the height of economic crisis.
Karaha in 1994 agreed with Pertamina and state electricity company PLN to build the power plant.
Karaha, which is controlled by U.S. energy firms Florida Power and Caithness, told the Swiss panel it had invested more than $100 million in developing the power project.
The $261 million was for its costs and the loss of future profits related to the project, Karaha said.
A US federal court confirmed the award.
Pertamina insisted however the award was flawed because the Karaha Bodas project was only in the development stage when it was suspended. Moreover, the government also suspended many other projects at the same time, Pertamina argued.
Pertamina therefore filed in mid March a lawsuit in the South Jakarta district court requesting it to annul the Swiss arbitration?s ruling. The court then issued an injunction ordering Karaha to stop its worldwide efforts to collect the $261 million, and imposed a fine of $500,000 a day on Karaha payable to Pertamina.
Meanwhile, Purnomo said on Wednesday the government would offer the Karaha Bodas project to other investors only after Karaha Bodas Co has made it clear that it is not willing to continue it. (Godang)