Pertamina Drags TPPI to Arbitration over US$600 Mln Unpaid Debts

Law

Tuesday, 31 August 2010 08:39

State-owned oil and gas company PT Pertamina has dragged PT Trans Pasific Petrochemical Indotama (TPPI) to Indonesia’s National Arbitration Agency (BANI) over unsettled debts worth US$600 million.

“Last month, we filed our dispute case with TPPI to the Indonesian National Arbitration Agency. The dispute was related with everything, debts, assets, etc,” detik.com quoted Vice President for Corporate Communication of Pertamina, Mochammad Harun, on the sideline of hearing with Commission VII late Monday.

President Director of Pertamina Karen Agustiawan said TPPI’s debts to Pertamina reached US$600 million. Apart from taking the case to an arbitration agency, Pertamina is also restructuring TPPI’s debts through debt-to-equity scheme.

Karen said earlier Pertamina will take the case to Arbitration as the company has defaulted on its debt payment.

TPPI’s debts arose after the company failed to restructure its debts through product-swap scheme between Pertamina, as guarantor of the debts, and TPPI.

The product swap was conducted through supplying low sulphure waxy residue (LSWR) to Mitsui and in return TPPI will supply middle distillate product (MDP) to Pertamina worth US$600 million (after taking into account interest).

TPPI has previously paid the debts through MDP scheme worth US$175 million, up until November 2009. However, it failed to pay MDP scheme worth US$100 million, excluding interest.

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