PLN proposes new venture with Pertamina to continue Karaha power project

State electricity company PLN has proposed that it team up with state oil and gas firm Pertamina to form a new joint venture to continue developing the controversial Karaha Bodas geothermal power plant in West Java, PLN president director Eddie Widiono said on Monday.

Eddie said however his company?s proposal was just an alternative which could be used in the event Karaha Bodas Co. LLC, which is controlled by U.S. energy firms Florida Power and Caithness, decides not to continue the project and if other investors show no interest to invest in it.

?It is obviously a feasible project, in PLN?s views,? Eddie told reporters.

PLN and Pertamina signed a contract with Karaha in 1994 to build the Karaha Bodas power plant. Karaha said it had invested more than US$100 million in developing the project.

Although its legal battle against Karaha is not yet over, the government still awaits the Cayman Island-based company to resume the power project.

The legal fight started after the government in 1998 suspended all new power projects including Karaha Bodas in the wake of severe economic crisis. Karaha then submitted its complaints to a Switzerland-based arbitration panel which in 2000 awarded $261 million from Pertamina for the Karaha costs and the loss of future profits.

Meanwhile, a US federal court this year confirmed the arbitration injunction and asked Bank of America and Bank of New York to freeze Pertamina?s assets. But Pertamina told them the assets belonged to the government. (Godang)