Pertamina set to lure investors on Karaha Bodas project
Thursday, February 7 2002 - 08:54 AM WIB
Pertamina President Director Baihaki Hakim estimates the power project would attract investors mainly due to the increase in the demand for electricity on the island of Java and the rising price of electricity in Indonesia.
Baihaki admitted on Thursday however no investor had expressed its willingness to continue building the Karaha Bodas plant.
Karaha Bodas was a joint venture among Florida Power and Lights, Caithness, Tomen (Japan), and Sumarah Daya Sakti. Karaha demanded the government to reimburse the funds the company has spent and be accountable for the financial losses suffered.
At end of April 1998, Karaha Bodas Company LCC claimed the Ministry of Mines and Energy, and the Office of the State Ministry for Enhancement of State Enterprises. Karaha objected that its generating plant of 440MW capacity was instructed to stop in 1997.
In December 2001, an arbitration tribunal in Geneva ruled that Pertamina and state power firm PLN pay to Karaha Bodas Co LLC $261.1 million, plus interest of 4 percent per year starting January 2001, in compensation for the cancellation in 1998 of the power project. Pertamina later filed an appeal against the ruling.
Baihaki also said Pertamina would offer Karaha Bodas to restart the power project. Another option was that Pertamina negotiate with the firm for a ?win-win solution?, he said. Baihaki did not specify however.
Baihaki further suggested that the government revoke the presidential decree issued in 1997, Keppres No 39/1997, which postponed the contracts it had signed with Karaha Bodas and other 25 IPPs. The decree was issued after severe economic crisis hit the country.
PLN was then unable to pay power rates, at between 5.6 US-cents and 8.4 cents, as stipulated the contracts. (godang)