The Hong Kong-based company Hopewell Holdings has stopped work on the Tanjung Jati B power project in Indonesia after issuing a force majeure notice, intended to protect its $620 investment in the project.
The work was halted after loans for the project were withdrawn and contractors suspended work as financial confidence in Indonesia evaporated. The country has been hit hard by the financial turmoil in the Asian markets. The project is unlikely, now, to meet its 2000 completion date.
Hopewell remains hopeful that it will eventually be able to complete Tanjung Jati B. Meanwhile CalEnergy is suing the Indonesian government and the state utility PLN for breach of contracts covering geothermal projects in Java.
The CalEnergy case involves two power projects. The Dieng geothermal plant in central Java began operating in March this year. However, CalEnergy has so far not received any payment for power delivered from the plant to the PLN grid. Back payments due amount to around $30 million.
The second issue concerns the contract for a geothermal plant located at Patuha, west Java. The Indonesian government has kept the project on its review list for over a year. This has been a factor in influencing banks to withdraw funding for the scheme, CalEnergy claims. Work at the plant had already started when the plant was placed on the review list, which was supposed only to apply only to plants were work had not started.