E. Kalimantan asks for more time to drop legal suit against KPC

The provincial administration of East Kalimantan has asked for more time to decide whether or not it will drop its legal suit against PT Kaltim Prima Coal, Neraca business daily reported on Monday.

The secretary general of the Ministry of Energy and Mineral Resources Djoko Darmono said in Jakarta over the weekend that the East Kalimantan administration would first to consult with the local legislative council before making the decision.

He said that the request was made by the East Kalimantan governor during a meeting at the office of Coordinating Minister of Economy in Jakarta last week. "The local administration asked one or two more days to decide whether it will drop the legal suit," he said following the meeting.

Attending the meeting included East Kalimantan governor Kaltim Suwarna and East Kutai regent Awang Farouk, senior officials at the Ministry of Energy and Mineral Resources, and executives of state-owned mining company PT Batubara Bukit Asam (PT BA).

The meeting also discussed PT BA?s interest to join in the bidding process.

Although the local government had yet to decide whether or not it would drop the case, Djoko said he was optimistic that the local government would sooner or later withdraw the legal suit to pave the way for the resumption of the divestment of the coal mining company.

Djoko said that the divestment process would soon be continued and the bidding would be opened in July. Bidders which pass the pre-qualification would be announced in September. All Private companies, state owned firms and the local government will be allowed to join the bidding.

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 recently filed a legal suit against the Ministry and Energy and Mineral Resources and existing shareholders for allegedly barring it from bidding the 51 percent share.

The East Kalimantan governor has said that he would drop the suit if the local legislators asked him to do so. (*)