Pertamina seeks lower penalty in KBC dispute
Tuesday, August 3 2004 - 02:59 AM WIB
State-owned oil and gas company PT Pertamina plans to talk to Karaha Bodas Company in a bid to reduce reduce the amount of compensation the former must pay the latter as ruled by the international arbitration, Bisnis Indonesia daily reported on Tuesday.
State Minister of State Enterprises Laksaman Sukardi was quoted by the paper as saying that Pertamina considered the amount of compensation of US$261 million as too high.
But he quickly added that Pertamina was committed to pay the compensation.
“If Pertamina didn’t pay the fines, the international community will look down on us,” he said.
Pertamina is still trying to find the money to pay for the fines.
Laksamana said that arbitration ruling must be honored.
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. (*)