MIGA to Resume Guarantees to Indonesia
Washington, DC, February 21, 2001 — The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, is once again ready to offer political risk insurance coverage for foreign direct investments going into Indonesia. The announcement follows the country’s agreement to reimburse the agency for a $15 million insurance claim paid on a canceled power project.
The claim, the first ever for the agency, was paid by MIGA last year to Enron Java Power Co. (Enron), which held a guarantee for its equity investment in P.T. East Java Power Corporation in Indonesia. The project, involving a 500-megawatt power plant near Surabaya, Indonesia, was one of many suspended by presidential decree in 1997 in response to the country’s economic crisis.
"Indonesia’s economic environment has shifted significantly since Enron entered into this venture, and the project was caught up by larger forces in the country’s power sector that affected other sponsors and insurers as well," said Luis Dodero, MIGA’s General Counsel and World Bank Group Vice President. "While we understand the circumstances that led to the project’s suspension, international law dictates that the cancellation be compensated. We are pleased that the claim has been resolved and we can now resume our guarantee operations in the country."
Over the past 13 years, MIGA has successfully resolved disputes between investors and host governments in developing countries through its dispute mediation services, enabling the agency to prevent formal claims from arising in a number of cases.
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