Govt, KPC to choose USA lawyer to settle dispute over divestment

The government and coal mining company PT Kaltim Prima Coal would appoint an independent lawyer to settle dispute pitting the company against the East Kalimantan provincial administration over the company's divestment obligation, officials at the ministry of energy and mineral resources said.

The ministry's secretary general Djoko Darmono told reporters the lawyer would study all the existing documents and decide the number of shares to be divested by KPC this year.

The move followed the lingering disagreement between KPC and the East Kalimantan provincial administration over the issue, he said.

East Kalimantan insisted that KPC had to divest 51 percent this year but KPC said it had to divest only 44 percent shares.

KPC, like many other mining investors, were required under contracts to sell up to 51 percent of its shares to the Indonesian government, firms and citizens after 10 years of commercial production.

East Kalimantan is interested to buy KPC's shares, but the province kept refusing to divulge how they would raise funds to acquire the shares.

The ministry's legal bureau head, TA Nurwinakum, told Petromindo.Com that KPC and the ministry had agreed the independent lawyer was not from Indonesia, Britain and Australia to ensure his or her independence. KPC is equally owned by Anglo-Australian mining giant Rio Tinto and energy firm Beyond Petroleum, which is the merger of British Petroleum (BP), Amoco, and Atlantic Richfield Company (ARCO).

Director general of mining Surna T. Djajadiningrat told Petromindo the lawyer was an American, but he refused to divulge his or name.

Aside from the number of shares to be divested, KPC and East Kalimantan are also still at odds over the price of the shares.

Djoko said the independent lawyer would only decide on the number of shares to be divested by KPC this year, while issues regarding the price would be discussed between KPC and the province after issues regarding the share number was settled.

Djoko also called on East Kalimantan to reveal its funding sources for the share acquisition.

"The province could seek funds from third party, but they have to be Indonesians," Djoko said.

Commenting on Djoko's statement, economic assistant to East Kalimantan provincial secretary Syaiful Teteng said the selection of an independent lawyer to settle dispute over the share number was a "second alternative".

"The first alternative is that the lawyers representing KPC and East Kalimantan should first meet to settle the dispute. If they fail to reach an agreement, we can invite an independent lawyer," Syaiful told East Kalimantan-based daily Suara Kaltim Friday evening.

Syaiful admitted that the province and KPC were still at odds over the number of shares to be divested by KPC this year, with East Kalimantan insisting the company had to sell 51 percent of its shares while KPC putting the share number at 44 percent.

Commenting on Djoko's call for the province to divulge its founding sources, Syaiful said the province would not be willing to talk about the funding sources as long as KPC was not transparent in talks with the province.

"KPC should not hide itself under the armpit of the central government. Please talk openly with the provincial administration," he said. (Godang)