East Kalimantan governor asked to drop legal suit against KPC

Members of the Legislative Council of East Kalimantan province have urged the province?s governor to drop the local authority?s legal suit against shareholders of PT Kaltim Prima Coal, Bisnis Indonesia reported on Friday.

The vice chairman of the council, Kasyful Anwar As?ad said that the council would soon hold a meeting to decide what the East Kalimantan administration should have to do in its legal suit against KPC shareholders.

But he said that many members of the council wanted East Kalimantan governor Suwarna A.F. to drop the legal suit so that the process of the company?s divestment program could be continued.

"After meeting with Coordinating Minister of Economy Dorojatun Kuntjoro-jakti tomorrow (Friday), the council would make its final decision related to KPC divestment," he told the daily in a telephone interview.

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 only represented the local people. "I will do what the legislators say," he said recently. The governor has also said that the provincial administration would not withdraw the suit until the central government allowed the province to buy the whole 51 percent stake that would be divested by the KPC existing shareholders.

The regent of Kutai, Awang Faroek Ishak, said he also supported the council?s appeal. "The provincial administration should first withdraw the legal suit and then talk the difference with the central government," he said.

The divestment of KPC shares has attracted so many buyers. Besides, the East Kalimantan administration and a number of state companies, several private companies have also expressed their interest to buy the 51 percent share. (*)