East Kalimantan may lose in legal fight with KPC

The East Kalimantan provincial administration may lose in its legal fight against shareholders of coal producer Kaltim Prima Coal because the evidence brought by the provincial government to sue the company is very weak, according to Spokesman of the Ministry of Energy and Mineral Resources Nurwinakun.

He therefore called on the provincial government to withdraw its legal suit because it would only further delay the divestment of the major coal mining company.

Nurwinakun said that the provincial authority?s legal action against KPC would be meaningless especially with the plan of the ministry to file a counter legal suit against the province.

"If the East Kalimantan administration continues with its legal suit, it will be meaningless. That?s? why we invite the local authority to return to negotiation table and pursue with the divestment plan according to existing contract," he was quoted as saying by Neraca daily.

According to the contract of works obtained, KPC is required to sell up to 51 percent of its shares to local companies. However, the divestment has been delayed, as bidders including East Kalimantan administration consider the price for the shares are too expensive.

From the beginning, KPC has refused to give exclusive rights to the East Kalimantan government to buy the 51 percent stake. The local government then filed legal suit against the company?s management for trying to prevent it from buying the company?s stake.

Sources said KPC, jointly owned by Rio Tinto and BP, feared that the sale of the whole 51 percent stake to the provincial government would pave the way for the change of the company?s control to other foreign company.(*)