Central government to sue East Kalimantan authority

The Ministry of Energy and Mineral Resources will file a legal suit against the East Kalimantan administration for the latter?s refusal to drop its civic litigation against Minister of Energy and Mineral Resources, Bisnis Indonesia reported on Monday..

The secretary of the ministry, Djoko Darmono, said in Jakarta over the weekend that the counter-legal suit would be filed at the South Jakarta district court where the East Kalimantan authority filed its civic charge against the minister.

The minister and shareholders of Kaltim Prima Coal, a major coal producer based in East Kalimantan were sued by the East Kalimantan administration for barring the provincial authority to buy the company?s 51 percent. The South Jakarta district court then seized the company?s assets as demanded by the provincial administration.

Djoko said that the ministry would also try to lobby the court to release the seized assets so that the divestment of KPC shares could proceed as planned.

KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.

However, the mandatory divestment program does not run as expected due to dispute with the East Kalimantan provincial administration, which then filed a legal suit against the existing shareholders and the minister for allegedly barring it from bidding the 51 percent share. (*)