Pertamina says govt must pay $261 million to Karaha Bodas

State-owned oil and gas company PT Pertamina asked the government to pay US$261 million claim to U.S. power producer Karaha Bodas Company (KBC) in accordance with the court?s judgment, Koran Tempo newspaper reported in its Wednesday edition.

Because, all the efforts including legal as well as diplomatic have failed to change the arbitration?s decision.

According to Pertamina?s finance director Alfred H. Rohimone, We must pay the claim to settle the dispute between the KBC, government and Pertamina. This decision will be conveyed to the team, which deals with the presidential decree no. 133/2000 (Restructurization and Rehabilitation of Private Power Producers). The team is chaired by Coordinating Minister for Economy.

?We can?t deny the decision of arbitration any longer, because that is the convention of New York,? Alfred said in Jakarta on Tuesday.

KBC has filed a suit against Pertamina in the arbitration court in Geneva, Switzerland and won the case in 2001.

The court has ordered Pertamina to pay US$261 million in compensation to KBC for canceling a joint power plant project during the financial crisis.

But Pertamina said the project was only worth of $111 million and it was ready to pay the same amount. The KBC rejected Pertamina?s offer.

Pertamina and KBC had met in the U.S. last week but they failed to reach an agreement on the settlement of the issue.

Moreover, several bank accounts belonging to Pertamina in the U.S. were frozen by courts.

Currently, Pertamina is struggling to get back the frozen $650 million from its 12 accounts in the U.S. banks. Though the New York Court had ordered the banks to return the money to Pertamina, it has not received the money so far.

Pertamina says the money in the frozen bank accounts is belonging to the government. (*)