Powell promises to support settlement of Karaha Bodas dispute

The U.S. government will support Indonesia to end the dispute over a geothermal power project between state oil and gas firm Pertamina and Karaha Bodas Co. (KBC) which is majority owned by U.S. investors, Foreign Minister Hasan Wirayudha said on Friday after holding talks in Jakarta with his U.S. counterpart Colin Powell.

?We discussed how to settle the Karaha Bodas case in a good way. Powell promised to give attention and give support to the settlement of the case,? Hasan told reporters.

Powell arrived in Jakarta on Friday for a one-day official visit.

The Indonesian government and state oil and gas firm Pertamina had been involved in a legal battle with Cayman Islands-registered KBC over a geothermal power project in Karaha Bodas village in West Java.

A Switzerland-based arbitration panel in 2000 ordered Pertamina to pay KBC US$261 million in compensation for its costs and loss of future profits due to the suspension by the Indonesian government of the Karaha Bodas power project. Indonesia cancelled the project in 1998 after it was hit by severe economic crisis.

KBC in 1994 agreed with Pertamina and state electricity company PLN to develop a geothermal power plant in Karaha Bodas.

The U.S. Court of Appeals ruled in June to uphold a decision in the U.S. courts to allow KBC to freeze Pertamina assets worth $275 million. KBC is principally controlled by two U.S. companies ? Florida Power Energy LLC and Caithness Energy LLC.

Pertamina had refused to follow the decision of the Swiss arbitration panel arguing that the $261 million compensation was not based on reasonable calculations. Moreover, the suspension of the Karaha Bodas project was force majeur, Pertamina said. (*)