Jakarta, KPC threaten to file counter suit against East Kalimantan
Monday, July 29 2002 - 03:44 AM WIB
"We have sent a letter to the Attorney General asking it to prepare for a counter suit if the Central Jakarta district court does not make any decision related to the KPC divestment by the July 31 deadline," the ministry?s secretary general Djoko Darmono was quoted by the news paper as saying.
Djoko said that the ministry did want the divestment of the KPC shares which have been delayed for several times to be delayed again until next year. He added that the ministry also demanded the East Kalimantan administration not only to drop its legal suit but also its request to the court to seize the coal producer?s shares.
The provincial administration?s secretary Syaiful Teteng said last week the East Kalimantan authority had withdrawal the legal suit against KPC to pave the way for the resumption of the KPC divestment. But both KPC and the ministry said that the court should first issue a statement on the withdrawal of the province?s legal suit.
KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors. According to the initial schedule, the divestment should be completed by July 31.
However, the mandatory divestment program does not run as expected due to a dispute over the percentage of the shares that must be sold to the central and local government. This has prompted the local authority to fill a legal suit to the Ministry of Energy and Mineral Resources and KPC shareholders for allegedly barring it from buying the entire 51 percent stake. The court accepted the request and then seized the company?s shares to guarantee that the shares would not sold to other parties.
Meanwhile KPC?s lawyer told Bisnis Indonesia daily over the weekend that the coal producer?s management had asked the government to protect it from possible legal suit in the future particularly from bidders who were not given opportunities to buy the company?s shares.
According to the existing contract, the company?s 51 percent shares should be sold to more than one bidder through a competitive bidding process. "If the shares are sold to a single buyer, the company should be freed from any possible suits from disappointed bidders," he added.
The provincial administration said last week it had identified three companies to finance the purchase of KPC?s 51 percent stake. Sources said that KPC?s existing shareholders feared it would lose its management control if the company?s majority shares fall to a single buyer. (*)