Pertamina ready to pay compensation to KBC: Lawyer

State oil and gas firm Pertamina said Friday it was ready to pay US$294 million in compensation to independent power producer company Karaha Bodas Company (KBC) but the Indonesian firm remains unclear whether the amount of its funds frozen by the U.S. banks are enough for the compensation.

Bank of New York and Bank of America have frozen some funds allegedly owned by Pertamina. But, Pertamina claimed that a portion of the funds belongs to the Indonesian government.

"The banks accordingly have yet to calculate the amount that belong to each party. Then, the Indonesian government's portion will be released Pertamina's will be retained," Pertamina's legal officer Simson Panjaitan said.

Pertamina will inject fresh funds if its portion in the bank accounts turns out to be less than $294 million, he said.

"This means that we will be able to pay compensation to KBC in installments. We don't care whether or not KBC accepts this payment mechanism," Simson said.

Pertamina and the Indonesian government have been involved in a protracted legal battle with KBC over the suspension by the Indonesian government in 1998 of KBC's geothermal power project in Karaha Bodas, West Java.

The Geneva panel of arbitrators in 2001 ordered Pertamina to pay $261 million in compensation to KBC for the power project suspension, which Pertamina and the Indonesian government refused to follow on the grounds that it was an overly big amount.

The compensation amount soared to $294 million on interest charges. (godang)