PLN optimistic to reach agreement with OPIC

The government and state-owned electricity firm PT PLN is currently negotiating with Overseas Private Investment Corporation (OPIC) over the latter's claim of US$290 million to the former, according to a press statement issued by PLN on Thursday.

PLN president Kuntoro Mangkusubroto said in the statement that the negotiation with OPEC had been undergoing since April, 2000, after the government formed a PLN rehabilitation and restructuring team through presidential decree no. 166/1999. The team is led by Coordinating Minister for Economy, Finance and Industry.

Kuntoro said that the ongoing negotiation process served as a proof that the government consistently respected law and regulations, but at the same time it was also considering its own financial capability.

OPIC -- as a federal insurance firm that guarantees U.S. investment overseas -- actually asked the Indonesian government last March to pay US$290 in compensation claim that it had paid to California Energy/Mid American Energy Holding.

An international arbitration ordered state electricity company PLN and the government to pay $290 million to the two U.S. energy investors for the former's decision to cancel the latter's energy projects in Indonesia, Patuha and Dieng.

Kuntoro's statement was in response to a warning from U.S. Ambassador to Indonesia Robert S. Gelbard that the U.S. government would confiscate Indonesian assets in the U.S. if PLN did not pay OPIC's claim.

The U.S. embassy said in a statement that it wanted the Indonesian government to soon settle OPIC's claim. It noted that the claims emerged because of PLN's fault.

However, the embassy did not answer Kompas' questions concerning the alleged corruption, collusion and nepotism practices in the awarding of contracts to Patuha and Dieng projects that could have a major implications according to U.S. own anti-graft law that prohibits its citizens and U.S. based corporations to engage in any graft practices anywhere. (*)