East Kalimantan takes KPC case to international arbitration

East Kalimantan provincial administration has taken its case against coal mining firm PT Kaltim Prima Coal (KPC) to the international arbitration through the Washington-based International Center for Settlement of Investment Disputes (ICSID), a document says.

A copy of the document obtained by the Bisnis Indonesia newspaper from a source revealed that the suit was filed by DNC law firm on behalf of East Kalimantan Deputy Governor Suwarna A. Fatah. The case was submitted on April 5, 2006 to the Secretary General of ICSID.

ICSID has received the letter on April 10, 2006.

DNC?s lawyer P.D.D. Dermawan said his firm is waiting for ICSID decision to take further action.

?At present, we are still waiting from a decision from the ICSID, which will be out in a short period,? Dermawan told the newspaper in Jakarta on Monday.

According to a source, East Kalimantan took the case to arbitration because of the KPC?s attitude, which didn?t respond to the decision taken at the limited Cabinet meeting on July 30, 2002 and the minutes of the Coordinating Minister?s meeting held on October 31, 2002

One of the decisions taken at these two meetings was that the province must get a stake in KPC shares in line with the provisions mentioned in the mining contract of work.

The contract says that mining company must divest its 51 percent shares after ten years of production. KPC?s parent company PT Bumi Resources didn?t divest the shares and now it is selling its stake to PT Borneo Lumbung Energi.

The source said if the arbitration process goes ahead, the status quo will be maintained until the case is over. It will affect the Borneo?s purchase plan.

Bumi Resources secretary Alamsyah Jusuf said his company didn?t know about this arbitration.

?Just ask Pak Ari S. Hudaya (Bumi Resources President director),? Alamsyah said. (*)