Pertamina refuses to pay compensation to KBC
Wednesday, August 18 2004 - 02:23 AM WIB
?If the corruption is proved, Pertamina will use it as a new evidence (to fight against KBC) in accordance with the legal systems applied in Indonesia, the United States and other countries,? the firm said in a statement.
It said the police investigation had nothing to do with Pertamina?s current dispute with KBC but was conducted as a part of law enforcement by a sovereign country?s authority towards fraud and corruption indications in a project.
KBC suspended its geothermal power project in West Java in 1998 following the government?s order as part of the retrenchment measure to cope with the economic crisis. The firm filed a complaint to the arbitration court, which later ordered Pertamina, which gave contract to KBC on behalf of the government, to pay compensations. American district and appeal courts later confirmed the arbitration ruling.
The courts ordered Pertamina to pay US$299 million, including $111 million in investment and $150 million in potential revenue plus interest.
An independent appraisal by an Italian firm estimated the value of the project at only $50 million, according to Pertamina.
The state company also said that KBC had lied to the arbitration court about its investment spending in the project, citing a report by the state financial comptroller BPKP that the American firm had inflated its work planning and budget by $19.16 million and failed to pay taxes amounting to Rp 5.67 billion.
Furthermore, KBC lied to the arbitration panel by denying that it had received $75 million in insurance claims as compensation for the suspended project, according to Pertamina.
KBC initially planned to develop a 400-Megawatt geothermal power plant. However, the geothermal steam found by the firm could only generate 30 MW, the state firm added. (Godang)