Pertamina wants government to help pay Karaha’s claim

State owned oil and gas company Pertamina has asked the government to share the payment of Karaha Bodas Company’s claim worth about US$294 million, saying that the government should also be responsible for the payment, Koran Tempo reported on Thursday.

Pertamina’s president Ariffi Nawawi said in Jakarta on Wednesday that the government should also share the responsibility in paying Karaha’s claim because the dispute with the American company was not only against the state owned oil company but also against the government.

“Who said it was only against Pertamina? It was the government who cut Karaha’s Bodas contract,” he said, saying that Pertamina, the government and other related parties such as state owned electricity company PLN would sit together to seek a fair solution.

Karaha Bodas sued Pertamina on behalf of the government through the International Arbitrary Agency for the suspension of its geothermal project in Karaha, West Java in 1997. Pertamina were then asked to pay a compensation of US$261 million but the state-owned oil and gas company refused to settle the payment.

Karaha Bodas Company’s claim to Pertamina sharply increased to US$290 million at the end of 2003 from only about US$262 million due to the accumulation of interest payment.

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. The government, however, revoked the decision in 1998 after protests from developers, Caithness Energy, Florida Power, Japan Tomen Power and their local partner PT Sumarah Daya Sakti. But in early 1998, the government again issued a decree to resuspend the project. (*)