Purnomo to lobby Powell to settle KBC case

During his two-week visit to the United States this month, Minister of Energy and Mineral Resources Purnomo Yusgiantoro will meet several high ranking officials including U.S. Secretary of State Colin Powell to find a solution to the on going dispute between an American company and Pertamina over a cancellation of a power plant project in Indonesia, Koran Tempo newspaper reported on Wednesday.

Indonesian government wants a statement of interest from the U.S. administration in connection with the case of U.S. power producer Karaha Bodas Company (KBC). Because of KBC-Pertamina dispute in New York court, the money belonging to the government in Pertamina’s 12 bank accounts at Bank of America and Bank of New York can’t be drawn.

Currently, Pertamina is struggling to get back the frozen $650 million from its 12 accounts in the U.S. banks. Though the New York Court had ordered the banks to return the money to Pertamina, it has not received the money so far.

Pertamina says the money in the frozen bank accounts is belonging to the government.

“Statement of interest from the U.S. government is required so that 95 percent of the money from Pertamina’s accounts can be drawn. Because that money belong to the government,” Purnomo said in Jakarta on Tuesday.

Indonesia’s oil and gas regulator BP Migas is also sending a team to the U.S. to show the documents regarding its money from LNG sales, which was credited into Pertamina accounts.

According to Purnomo, the money in Pertamina’s accounts wholly belong to the government.

While responding to state-owned oil and gas company Pertamina’s request for settlement of KBC case through G to G (government to government), Purnomo told Harian Ekonomi Neraca newspaper that he has already tried his best to solve the problem through government channels.

Indonesia had discussed this problem with Powell during his visit to Indonesia last year but the efforts didn’t yield much so far.

KBC and Pertamina reached an agreement to build a geothermal power project at Karaha, Garut in West Java before 1997 crisis.

The government cancelled the project due to the economic crisis in 1997. KBS claimed compensation from Pertamina through arbitration in Geneva in 2001. The arbitration court ordered Pertamina to $261 million to KBC.

But Pertamina disputed the figure and said it will only pay the real worth of project, $111 million. KBC refused to receive $111 million. KBC asked the help of the U.S. courts to freeze Pertamina bank accounts. (*)