Government vows to settle KPC dispute amicably

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government was committed to settle dispute with coal mining company PT Kaltim Prima Coal over its divestment obligation in an amicable way.

Purnomo said the recent agreement between KPC and the ministry to appoint an independent lawyer to decide on the matter was part of the government's efforts to solve the lingering dispute the amicable way.

"As a matter of fact, this is not an arbitration proceeding. We shall do our utmost to avoid arbitration solution, because today we are committed to boost good investment climate," Purnomo told Petromindo.Com in an interview on Monday.

The dispute revolves around the number of shares that KPC, which operates a huge coalmine in Sangatta, East Kalimantan, has to divest this year.

Under the contract of work, KPC has to divest up to 51 percent of its shares to either the Indonesian government, state companies or private companies after 10 years of production.

According to Purnomo, KPC insisted that it has to divest only 37 percent shares until 2000, but the ministry maintained it had to divest 44 percent shares that year, while the East Kalimantan provincial administration, which is interested to buy the shares, said it had to sell 51 percent shares.

Each of them has their own reasons to justify their respective claim.

The ministry and KPC recently agreed to appoint an independent lawyer to determine which claim is valid.

"We have to handle this issue carefully, because it concerns an international investment. BP (Beyond Petroleum) is involved in it and Rio Tinto is also there. We can't make a hasty judgment because any judgment will have a legal consequence," Purnomo said.

Anglo-American energy firm BP and Anglo-Australian mining giant Rio Tinto equally owns KPC. (Godang)