East Kalimantan to drop lawsuit against central gov't

Governor of East Kalimantan Suwarna Abdul Fatah said on Monday that the provincial administration would drop its lawsuit against the central government over dispute in the divestment process of coal mining giant PT Kaltim Prima Coal (KPC).

East Kalimantan provincial administration through its wholly owned business unit PD Setia Bakti Mulia had recently filed lawsuit at the Jakarta administrative court against minister of energy and mineral resources and director general of geology and mineral resources had not taken necessary steps to speed up the divestment process of the East Kalimantan based KPC.

"We have been wrong in filing the lawsuit and we come to apologize" said Sukardi Djarwo Putro, East Kalimantan provincial council speaker after accompanying Suwarna to meet Minister of Energy and Mineral Resources Purnomo Yusgiantoro late Monday.

Earlier, Secretary General of the Ministry of Energy and Mineral Resources Djoko Darmono said that the lawsuit had no legal standing since PD Setia Bakti Mulia was a party in the coal contract of work that regulated the divestment process.

Under the coal contract of work KPC is obliged to offer 51 percent of its shares after 10 years of production to Indonesian government or to Indonesian owned business entities. But protracted disagreement over divestment price forced the ministry of energy and mineral resources, which directly negotiate with KPC management and shareholders, decided to set another deadline: March 2002.

East Kalimantan administration had repeatedly demanded that it be given first priority to buy KPC's 51 percent shares the price far lower than Rio Tinto and BP Plc., KPC's shareholders initial offer price of US$442 million. (Alex/Godang)