PLN says OPIC turns down US$240m offer
Thursday, January 4 2001 - 04:30 AM WIB
State electricity company PT Perusahaan Listrik Negara (PLN) has offered to increase its payments in a disputed claim with Overseas Private Investment Corp (OPIC) by 10.6% to US$240 million, an official has said.
But the PLN official told Reuters yesterday that the United States government-owned insurance agency had rejected the offer as too low, stalling the already-long and heated negotiations, prompting worries of a fresh confrontation with Washington.
PLN has been pressing to change what it considers punitive agreements foisted on it by the corrupt regime of former President Soeharto, which ended in 1998.
But the move has met strong resistance from the United States, several of whose companies are involved, and which insists the agreements are legally valid.
The official said PLN had raised the offer to US$240 million from US$217 million, but OPIC rejected the proposal as it was only willing to cut the disputed amount to US$269 million from the original US$290 million.
"Negotiations have stalled. OPIC has reduced the claim to US$269 million from US$290 million, but PLN could only raise the offer to US$240 million from US$217 million," the official said.
The disputed US$290 million insurance claim arose from PLN's failure to honor power purchase contracts with CalEnergy, a unit of MidAmerican Energy Holdings Co.
OPIC is a US government agency that insures and offers financing for private US investments in developing countries.
An arbitration court in 1999 ordered Indonesia to pay US$572 million in compensation after PLN refused to pay for electricity from a power plant built by CalEnergy and suspended a contract to build another plant.
When PLN refused to compensate CalEnergy, OPIC - which insured the two power projects - it paid MidAmerican US$290 million.
PLN's bottom line has been battered by the sharp fall in the rupiah since late 1997, as most of its costs are in dollars.
At the heart of PLN's financial woes are unresolved disputes with independent power producers (IPPs) with whom it signed controversial power purchase deals in the last years of former President Soeharto's autocratic rule.
Chief economics minister Rizal Ramli recently ordered PLN to resolve the IPP dispute by the first quarter of 2001. (*)