E. Kalimantan urged to drop legal suit against KPC before July 15
Tuesday, July 9 2002 - 03:09 AM WIB
The ministry?s secretary general Djoko Darmono said in Jakarta on Monday that the decision of the provincial administration to drop the legal suit against the ministry would not solve the entire the problem until the legal suit filed against KPC shareholders was also withdrawn.
Djoko said that in order to clear all the obstacles related to the KPC divestment, the provincial administration should also withdraw its legal suit against KPC shareholders. "The suit against KPC shareholders should be withdrawn by July 15 at the latest. Otherwise, the ministry will launch a counter suit against the East Kalimantan authority," he said.
Djoko believed that the provincial administration would heed the ministry?s demand. According to him, during a meeting held in Jakarta recently, representatives of the provincial administration had expressed their willingness to drop the suit during a recent meeting.
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 over the percentage of the shares that must be sold to the local government. This has prompted the local authority to file legal suit to the Ministry of Energy and Mineral Resources and KPC shareholders for allegedly barring it from buying the entire 51 percent stake.
In a recent meeting held in Jakarta, both the ministry and the local administration had settled their difference related to the percentage of the shares that must be sold to the local and central government.
According to the agreement made during the meeting organized by Coordinating Minister of Economy, the central government (Ministry of Energy and Mineral Resources) would buy 20 percent of the 51 percent of the shares which would be divested by the current shareholders. The provincial administration will buy the other 31 percent.
The East Kalimantan provincial administration will buy 12.4 percent of the 31 percent allocated to the province, while the East Kutai regency will buy the remaining 18.6 percent. The 12.4 percent that will be bought the provincial administration will be then transferred to 12 regencies in the province, while those bought by the central government will be offered to interested parties both private and state companies. (*)