Pertamina refuses to pay $150 million to KBC as compensation
Tuesday, January 20 2004 - 02:21 AM WIB
Pertamina has agreed to compensate KBC only $110 million although the international arbitration had ordered it to pay $261 million, the company?s finance director Alfred Rohimone said on Monday in Jakarta.
According to him, KBC invested only $110 million in the project and the remaining $150 million was based on the calculation of potential losses due to the cancellation of the power project.
Alfred admitted that KBC won the $261 million (including interest) damages at the international arbitration, which was not attended by Pertamina and Indonesian government, in 2000. An appeal for review was not made because Pertamina paid the administration charges for the review very late.
However, Pertamina will continue to negotiate with KBC over lower compensation, he said.
?We have already requested the help of U.S. government in this case, but U.S. said it can?t intervene in the court matters. However, U.S. wants to facilitate direct negotiations between Pertamina and KBC,? Alfred said.
Meanwhile, Pertamina?s lawyer Panjaitan said that his side would present argumentation to reduce Pertamina?s burden. Panjaitan said KBC received a $75 million claim from an insurance company and this amount would help support his team?s argumentation.
But, the insurance claim was not recognized by the Swiss-based arbitration as evidence.
In a related development, Pertamina announced on Monday that the New York District Court will decide on January 27, 2004 on the ownership of the frozen bank accounts belonging to Pertamina in U.S.
Separately, Fifth Circuit appeal court in New Orleans will begin its first hearing on Wednesday to decide on the execution of the arbitration?s decision. Pertamina is still also waiting Indonesia?s Supreme Court?s decision on KBC case. Pertamina is expecting a quick Supreme Court ruling.
Karaha Bodas Company?s claim to Pertamina has sharply increased to $290 million at the end of 2003 from only about $261 million due to the accumulation of interest payment.
An American court then ordered the blocking of Pertamina?s accounts in a number of American banks, which also included the government?s money worth $650 million.
The Karaha Bodas project is one of dozens of mega projects which were suspended by the government after the financial crisis hit the country in late 1997. (*)