Govt not involved in negotiations with OPIC

The government is not directly involved in negotiation with the independent power producers (IPPs) including with the Overseas Private Investment Corp. (OPIC), according to the Finance Ministry.

The Ministry said in a press statement that the negotiation was made by the electricity tariff team headed by the president of the state electricity company PLN.

"So that's why there's never any claims from OPIC to the government of Indonesia. What we get is only an announcement that OPIC has paid insurance claims of MidAmerican Energy," the statement said.

Finance Minister Bambang Sudibyo was quoted recently by Bisnis Indonesia daily as saying that the government would neglect the claims of OPIC because the government had no money.

The statement had prompted other senior ministers and President Abdurrahman Wahid himself to reassure foreign investors that Indonesia would honor business contracts including those with the IPPs.

OPIC had claims to the government of Indonesia after it paid the insurance claims of MidAmerican Energy after the latter won its dispute with the state electricity firm PLN in an international arbitration panel.

PLN had been unable to commit with its contract to purchase power at a set price from 27 IPPs including MidAmerican Energy. PLN and the government are now seeking to renegotiate the contracts, which were signed during the authoritarian rule of former president Soeharto. Some say that the contract was made under a corrupt mechanism. (*)