Pertamina wants government to share cost of Karaha Bodas claim

State owned oil and gas company PT Pertamina wants the government to share the payment of claim demanded by American independent power producer Karaha Bodas Co. over the cancellation of their power project eight years ago.

Karaha Bodas built a geothermal power plant in West Java in 1990s but the government suspended the project indefinitely in 1998 as part of the retrenchment measure to cope with Asian economic crisis.

?It was not Pertamina's decision, but the government's (to halt the project),? Pertamina?s president Ari Soemarno, said on Tuesday

?We object if we have to cover (the entire claim),? Ari told reporters. ?If we don't pay, Pertamina will be sued. And what if our overseas assets get seized?''

A Swiss arbitration tribunal in December 2000 ordered Pertamina to pay Karaha $261 million to cover the $100 million it had spent plus lost profits and interest. Karaha then turned to U.S. courts to force payment.

After years-long legal battle, the United States? Supreme Court issued a ruling on October 2, 2006 that upholds a lower court ruling that ordered payment from a frozen bank account held by Pertamina in the United States.

In August 2002, a U.S. District Court froze $285 million of Pertamina's funds in the U.S. About $29 million of the funds belongs to Pertamina while the rest is proceeds of liquefied natural gas sales belonging to the Indonesian government

In the past, the government insisted that the dispute was between Karaha Bodas and Pertamina and as such it should be resolved in a business-to-business agreement without involving the government. However, Ari said Pertamina would not accept if the government ask it fully repay the Karaha Bodas claim.

?We shall ask to negotiate with the government (on the payment of Karaha Bodas? claim),? he said. (Godang)