East Kalimantan withdraws legal suit against KPC

East Kalimantan provincial administration has finally agreed to withdraw a legal suit against coal mining company Kaltim Prima Coal (KPC), paving the way for the resumption of the company?s divestment program.

?The governor has filed an application letter to the South Jakarta Court to withdraw the legal suit,? Abdal Nanang, the chairman of the special team of the legislative council of the province?s Kutai regency.

Separately, the secretary of the provincial administration, S. Sjafran, said the agreement on the withdrawal of the legal suit was made during a meeting with ministry of energy and mineral resources. ?One of the outcome of the meeting was to withdraw the legal suit,? he said.

The East Kalimantan government last year filed a legal suit against KPC for allegedly barring it from bidding the company. The local government said that the high price imposed by KPC is one of indications of the company?s efforts to prevent it from joining the bidding.

According its contract of works, the company is required to divest 51 percent of its shares to local partners after certain periods of its operation.

Last month, KPC, which is equally owned by Rio Tinto and BP, agreed to lower the value of KPC?s entire stock to US$822 million, or $419.22 million for the 51 percent stake of the company.(*)