C. govt threatens to sue E. Kalimantan on KPC divestment case

The central government has threatened to sue in court the East Kalimantan provincial administration if it does not drop its legal suit against shareholders of coal miner PT Kaltim Prima Coal (KPC) before July 31, East Kalimantan-based Kaltim Post daily reported on Monday.

East Kutai regent Awang Faroek Ishak was quoted by the daily as saying that the central government?s legal action plan had been agreed on by central government officials and KPC executives in their meeting late last week.

In the meeting, central government officials and KPC leaders agreed to extend to another one month to July the divestment of 51 percent of KPC shares to Indonesian investors, according to Awang. The meeting participants hoped that the East Kalimantan will drop its legal suit in the South Jakarta district court against KPC shareholders Rio Tinto and BP Plc which allegedly had blocked it from buying KPC shares.

Earlier, the central government and KPC had expected that East Kalimantan would drop its legal suit before June 30, the initial deadline for KPC share divestment.

The East Kalimantan administration insisted that it be given priority to buy KPC shares, which was opposed by the central government and KPC because such preferential right is not mentioned in KPC?s contract.

Meanwhile, the central government recently decided that KPC shares will be sold to state enterprises, Indonesian private investors and East Kalimantan Province.

KPC operates a huge coalmine in Sangatta in East Kutai, East Kalimantan. (*)