Pertamina calls on govt to delay payment of OPIC claim

President of the state-owned oil and gas company Pertamina Baihaki Hakim has called on the government to delay the payment of the US$260 million claim from U.S. Overseas Private Investment Corporation (OPIC) until its court battle with related U.S. investor had been settled.

The evening Suara Pembaruan daily said that Baihaki made the statement during a hearing session with the House of Representatives commission VIII on energy and mining in a response to question raised by top legislator Emir Moeis.

Amid strong pressure from the U.S. government, Coordinating Minister for the Economy Rizal Ramli on May 1 announced that the government would pay the $260 million claim from OPIC following the government past decision to cancel the Patuha (in West Java) and Dieng (in Central Java) geothermal-powered power plants, which were supposed to supply power to the state electricity company PLN. The two power plants are respectively owned by Patuha Power Ltd. (PPL), and Himpurna California Energy (PCE). OPIC which insured the investment covered the losses suffered by the two investors, but OPIC latter charged the Indonesian government.

In addition to the OPIC claims, the creditors for the Patuha and Dieng projects are also demanding $140 million in compensation from PLN or the government.

Several top government officials including Finance Minister Prijadi Praptosuhardjo and Minister of Mineral Resources and Energy Purnomo Yusgiantoro had also earlier called on Rizal to delay the payment of the claim.

Meanwhile, Pertamina, which had invested some $85 million in the exploration and exploitation of the Dieng geothermal resource, has been involved in a court battle with PPL and PCE. The state oil and gas company won the case in the first round at the Central Jakarta district Court. The case is currently being processed by the higher court.

Baihaki said that the U.S. government had been putting a pressure on Pertamina to back off, and opted for an out of court settlement. He said that the company was previously informed that the $140 million claim made by the Patuha and Dieng creditors would be cancelled if Pertamina drop the case, but it turned out that the information was not true.

Baihaki said that Pertamina would have to continue with the legal battle with PPL and PCE despite the pressure from the U.S. government because the later did not promise any compensation for dropping the case.

Baihaki also appealed to the House for political support particularly amid signs that there were efforts to hand over the geothermal project to parties outside Pertamina after the latter had invested massively and spent so much energy in the project. He did not provide details.

?There?s an indication toward that the project will be handed over to other parties,? he said.(*)