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tate airline company PT Merpati Nusantara and state power firm PT PLN have handed over the thorny problems involving the two of them, a number of Chinese lenders and China's Xi'an Aircraft Industry, to the government.

Merpati president director Bambang Bhakti said on Friday the government would soon take action to help settle outstanding matters.

"Merpati already had business-to-business negotiations with Xi'an four times (to settle this). But there were no agreements," he told reporters after a meeting with Vice President Jusuf Kalla at the vice president's office in the afternoon.

"So, this will go back to government-to-government (talks). Hopefully, the governments will reach a win-win solution in very short time," he said.

But Bambang refused to disclose options mulled by the government.

The meeting was also attended by Transportation Minister Jusman Syafii Djamal and State Minister for State Enterprises Sofyan Djalil.

The dispute started when Merpati failed to fulfill its commitment to pay up to US$230 million for the purchase of 15 Xinzhou-60 aircraft, at around $15 million each, as stipulated in a contract it had signed in 2006 with Xi'an, after delivery of only two aircraft in 2008.

Merpati was using a soft-loan facility from the China Export Import Bank to finance the purchase.

Xi'an has said it might take the dispute to international arbitration.

Bambang said Merpati would only be able to pay for a total of eight aircraft due to financial problems.

"We are starting to gain operating profits but we're still on our way towards recovery. How are we going to repay our debts?" he said.

Energy and Mineral Resources Minister Purnomo Yusgiantoro has hinted the Merpati case has maybe played a part in Chinese banks holding back on disbursements for PLN's 10,000 MW power program.

But PLN president director Fahmi Mochtar said he had ensured that Chinese financiers - the China Export Import Bank (Chexim), Bank of China and the China Development Bank - would stick to their commitments to diburse agreed loans to the program and its projects.

"A PLN negotiating team went to China last week. Chinese banks said they would keep financing the program," he said.

The crash energy program needs $8 billion to be completed.