RI agrees to pay US$400m to OPIC, banks: report

The government of Indonesia has agreed to pay U.S. government insurance giant Overseas Private Investment Corporation (OPIC) and a group of overseas lenders some US$400 million in claims, the Koran Tempo daily reported Friday.

The paper quoted a source as saying that the agreement was signed on July 31 by Finance Minister Rizal Ramli and U.S. Ambassador to Indonesia Rober Gelbard.

The paper was not able to get confirmation from Rizal.

The government obligation to OPIC and foreign bank creditors emerged after the government delayed the development of the Dieng and Patuha geothermal power plants following the country?s 1997 financial crisis. U.S.-based Cal Energy was the contractor of the project.

OPIC, which covered the risk of Cal Energy?s investment in Indonesia, then demanded the government of Indonesia to pay compensation for the delay. An international arbitration panel ordered Indonesia to pay OPIC some $260 million, and another $140 million to a group of Cal Energy?s bank creditors.(*)